Voluntary Carbon Markets Rocket in 2021, On Track to Break $1B for First Time
Press Release

Washington DC (15 September 2021) 

In the first eight months of 2021, voluntary carbon markets have already posted a near-60% increase in value from last year, driven by corporate net-zero ambition and growing interest in carbon markets to achieve Paris climate goals, a new report finds.  

“We’re seeing record market volume and value in 2021,” said Stephen Donofrio, a lead report author and Director of Ecosystem Marketplace. “The markets are on track to hit $1 billion in transactions this year if current levels of activity and growth continue. It’s not just companies who are buying carbon credits as a small piece of their corporate net-zero strategy. There’s an increase in speculators purchasing credits. The combined value of those deals is becoming a serious source of finance for green projects around the world.” 

Data from the State of Voluntary Carbon Markets 2021 shows that as of 31 August 2021, voluntary carbon markets had already posted $748.2M USD in sales for 239.3 million credits, each representing one ton of carbon dioxide equivalent, reflecting a 58% year-to-date jump in value (up from $472.9M), and growth in credit volume of 27% over 2020 performance (up from 188.2 million credits transacted). 2020 was already a banner year for voluntary carbon markets, continuing 2019’s strong growth trajectory despite the emergence of COVID-19, says Donofrio—making 2021’s performance all the more striking. 

The most active buyers in the market are the energy, consumer goods, and finance and insurance sectors. All are sectors that face challenges in quickly cutting climate impacts both in direct as well as financed emissions, says Donofrio, since a large share of their emissions come from an infrastructure or technological base they can’t quickly upgrade, or from parts of their supply chain or portfolio they have less influence over than direct operations. Carbon offsets are being purchased by companies to immediately reduce their net emissions footprint as they work to abate these more costly and difficult-to-address emissions in the medium to longer term.  

The world needs to cut climate pollution in half from current levels by 2030, and bring them down to net zero by 2050, to meet the Paris Agreement’s 1.5°C target. To support such rapid decarbonization, voluntary action through the carbon markets will need to increase 15-fold by 2030 and 100-fold by 2050 from 2020 levels, according to the Taskforce on Scaling Voluntary Carbon Markets (TSVCM), an initiative led by Mark Carney, UN special envoy for climate action and former Governor of the Bank of England. The TSVCM is currently forming an independent Governance Body tasked with ensuring carbon credit quality and standardization. 

“Ecosystem Marketplace’s latest report provides insights into the swift growth of voluntary carbon markets and emphasizes the need to guide the markets to deliver the highest quality possible,” says Annette Nazareth, Operating Lead for the Taskforce on Scaling Voluntary Carbon Markets and former SEC commissioner and Senior Counsel at Davis Polk & Wardwell. “I’m delighted to see the significant market momentum of the past year, as ever more companies and individuals are taking action. The new Governance Body being established by the TSVCM will play a key role in ensuring the large volume of carbon credits traded are of high quality and integrity.” 

Tightening supply lifts prices for many credit types 

Carbon credit projects and retailers are struggling to keep up with demand in a hot market, says Patrick Maguire, a lead author of the report and Senior Manager of Ecosystem Marketplace.  

A tightening supply has also driven up prices for many types of credits. The weighted average price per ton for credits from forestry and land-use projects that reduce emissions or remove carbon from the atmosphere has been on a steady upward path, rising from $4.33 per credit in 2019 to $4.73 per credit so far in 2021, with a spike to $5.60 per credit in 2020. Prices for waste disposal credits (from projects such as landfill methane capture or diversion of organic waste for composting/digestion) and clean-burning cookstoves have also jumped so far in 2021 from their 2020 levels, by 42% for waste disposal and 16% for clean cookstoves. 

“Whether higher prices will entice new supply to enter the market quickly enough to meet rising demand is still an open question,” says Maguire. “Most carbon projects typically take years to develop.”  

But higher prices are certainly good news for project developers. The vast majority of credit transactions are for projects based in Asia, Latin America, and Africa, report authors say. 

“Voluntary carbon projects have played a tremendous role in financing innovative projects for communities on the frontlines of the climate crisis,” says Jennifer Morris, Chief Executive Officer of The Nature Conservancy. “While the increased demand is encouraging, we need to move further, faster – it is imperative that this upward trend in prices reported by Ecosystem Marketplace accelerates if the voluntary carbon market is to play its full role in supporting sustainable development around the world.” 

Demand for credits from nature-based solutions continues to be particularly high, says Donofrio. Projects that reduce emissions by protecting or sustainably managing at-risk forests, grasslands, and other ecosystems saw the volume of demand more than double in 2021 from 2020’s already-record high levels. Transactions of REDD+ credits, which generate emissions reductions by harnessing carbon finance to protect tropical forests from human-caused destruction or degradation, exploded in 2021, growing 280% between 2020 and 2021 year-to-date. 

“We simply can’t meet the Paris goals without nature-based solutions,” says Dan Lambe, President of the Arbor Day Foundation. “Voluntary carbon markets are an important tool to help the world move much faster to restore and protect nature. It’s certainly exciting to see the markets reaching this new level in Ecosystem Marketplace’s latest market update.” 

Experts see renewable energy’s 2021 rally as a “last hurrah” in voluntary carbon markets for some regions 

2021 may also mark the peak of renewable energy (RE) as a major share of the carbon markets, for projects originating in developed countries. RE volumes rose from 42.4 million credits in 2019 to 80.3 million credits in 2020 and remained steady at 80 million credits in 2021, making it the second-largest market category after Forestry and Land Use. Prices for RE credits tumbled from $1.42 per credit in 2019 to $0.87 per credit in 2020 before rising to $1.1 per credit as of September 2021.  

“A surge in transactions coupled with falling prices is consistent with a shift in renewable energy credits coming from Asia, now that the financial additionality case is harder to make for RE in developed countries,” says Maguire.  

All carbon projects need to demonstrate “additionality,” meaning that they could not exist without carbon finance, in order to sell credits. As renewable energy becomes increasingly competitive with other forms of energy, as it has in developed economies, it no longer needs carbon finance to survive. “RE projects may continue to meet additionality criteria in some places such as less developed countries,” Maguire says, “but particularly in developed countries we don’t expect to see significant new supply in the coming years.” 

Net zero and carbon neutral ambition, global attention to climate talks, point to a strong final quarter 

The report’s writers say that all signs point to continued market growth through in the final quarter of 2021. Global climate talks in November 2021 are also expected to be a key moment for new net-zero commitments to be announced.  

“The challenge for voluntary carbon markets today is no longer finding credit buyers,” says Michael Jenkins, CEO of the nonprofit group Forest Trends, Ecosystem Marketplace’s parent organization. “Now, we all need to guide the markets to deliver the highest quality possible, with the greatest benefit possible for planet and communities. Market data and transparency help us ensure that level of integrity.” 



Media contact: Genevieve Bennett / + 1 202 298 3007 / gbennett [at] forest-trends.org 

Ecosystem Marketplace is an initiative of the non-profit organization Forest Trends, and a leading global source of information on environmental finance, markets, and payments for ecosystem services. As a web-based service, Ecosystem Marketplace publishes newsletters, breaking news, original feature articles, and annual reports about market-based approaches to valuing and financing ecosystem services. We believe that transparency is a hallmark of robust markets and that by providing accessible and trustworthy information on prices, regulation, science, and other market-relevant issues, we can contribute to market growth, catalyze new thinking, and spur the development of new markets and the policies and infrastructure needed to support them. Ecosystem Marketplace is financially supported by a diverse set of organizations including multilateral and bilateral government agencies, private foundations, and corporations involved in banking, investment, and various ecosystem services. 

However You Look at It, Our Future is Forests

  • Tropical forests are a key tool for near-term emissions reductions as part of a larger strategy to meet Paris climate targets.
  • A portfolio of market-based mechanisms including REDD+ and carbon markets can channel finance to cost-effective emissions reductions right away, and help ensure companies follow through on their long-term net-zero commitments.  
  • These mechanisms have matured over the past two decades – now it is time to scale them quickly, while maintaining the highest level of environmental and social integrity.  
  • REDD+ can’t work in the absence of inclusive and just partnerships with indigenous peoples and local communities, the planet’s best guardians of forests. 

The world is not on track to meet the Paris target of stabilizing warming in the 21st century at 1.5°C or lower, and there is very little time to change our trajectory. The IPCC estimates that global CO2 emissions in 2030 must be 40-50% lower than they were in 2010 in order to avoid the worst effects of climate change. This is still possible. 

Carbon markets allow us to lower the cost of cutting greenhouse gas emissions. When buyers can use markets to seek out the most cost-effective offsets, their savings can – and should – be used to “buy” even greater emissions cuts. This mechanism enables countries and companies to increase ambition, moving the world as close as possible to the 1.5°C target. 

Carbon markets also allow hard-to-abate sectors to play their part in achieving net zero emissions quickly. Where emissions are directly controlled by the emitter (“Scope 1” emissions) or can be cut by sourcing electrical generation, heating, or steam (“Scope 2”), this should be done. But where emissions come from elsewhere in the value chain (“Scope 3,” including for example: upstream or downstream transportation, agricultural supply chains, waste disposal), offsets may be the best option for quick action. In some cases, cutting emissions requires substantial operational, technological, and/or financial transitions that will take many years. Offsetting projects often provide immediate or short-term carbon storage. Carbon markets therefore offer companies an opportunity to immediately become carbon neutral while also pursuing a longer-term net-zero goal.  

When it comes to nature-based solutions, avoided deforestation needs to be the priority.  

REDD+ credits, generated through efforts to reduce emissions from deforestation and forest degradation, allow us to drive finance to tropical forests and their stewards. Preventing tropical forest loss is critical not only for climate stability but also for maintaining global biodiversity values, sustainable development goals, and indigenous and traditional cultures. 

Protecting existing carbon sinks from damage or conversion delivers twice as much greenhouse gas mitigation as any other nature-based strategy, including reforestation. New research also indicates that there is an asymmetry in changes to atmospheric CO2 concentrations between emissions and removals. In other words, compensating for an emission requires a greater amount of CO2 removal than avoiding that emission in the first place.  

It is especially hard to imagine how companies in hard-to-abate sectors can meet their net-zero commitments without REDD+. Tropical forests remain one of the largest – and still mostly untapped – potential sources of offset supply, and probably the only one that could be ramped up quickly enough to meet offset demand in the next decade without driving a major spike in the price of carbon. Avoided tropical forest conversion holds the potential to provide at least three gigatons per year of cost-effective emission reductions – which would cover one-fifth of the gap we need to close by 2030 to keep warming under 2°C. 

The decline of tropical forests, our planet’s great carbon sinks, thus represents an enormous stumbling block to delivering on the Paris Agreement. The longer tropical deforestation goes on, the worse the problem gets. In Amazonia, for example, mature forests more than mitigated the fossil fuel emissions of every single national economy in the region, with the exception of Venezuela, between 1980 and 2010. For most nations (Bolivia, Colombia, Ecuador, French Guiana, Guyana, Peru, Suriname) the sink probably additionally mitigated all anthropogenic carbon emissions from Amazon deforestation and other land-use change. But today that sink is in decline. Deforestation pressures from forces including land grabbing, logging, cattle ranching, agribusiness, and fires are being aggravated by climate change. This combination of forces is flipping the Amazon to a net carbon source instead of a sink, although scientists say recovery is still possible. 

There is also a moral argument for focusing climate finance on REDD+. Tropical forests cover 10% of the earth’s land area, but hold two-thirds of global biodiversity, much of which western science has yet to measure or understand. These forests are the source of livelihoods for millions of people. Many of who – particularly indigenous peoples – have always defended forests, and thereby the world’s climate future, with no recognition and in the face of violence and extreme pressure. Climate justice demands that we acknowledge the debt we owe these communities, and recognize all the values of living forests, not only the ones that can be measured by our economic system.  

We must guarantee REDD+ integrity through transparency and inclusion. 

REDD+ cannot work without a meaningful commitment to – and accountability for – participation by indigenous peoples and local communities (IPLC), given their role as the main stewards of the world’s carbon sinks and biodiversity. This commitment must include supporting IPLC in securing land tenure and carbon rights, and guaranteeing Free, Prior, and Informed Consent (FPIC). It also means that climate finance mechanisms need to do more work to incorporate indigenous perspectives and economic development strategies (as laid out through Life Plans or other tools). 

Likewise, carbon markets on the whole cannot deliver on their promises without transparency and a strong commitment to integrity. Our Ecosystem Marketplace initiative was founded with this mission: as an objective, not-for-profit information platform providing the kind of trustworthy and timely information that carbon markets and other climate finance mechanisms need to function effectively. 

We see a role for multiple REDD+ mechanisms to attract different types of funding and fit different contexts. 

One issue that seems to be dividing this space is whether resources and attention should be focused on jurisdictional or project-based REDD+. Our position is that we need more of both 

Jurisdictional REDD+ can deliver the large-scale supply and demand signals that are needed. It can also guarantee higher floor prices for REDD+ credits at a large scale. Jurisdictional approaches are uniquely equipped to incentivize governments to address many underlying drivers of illegal deforestation: weak enforcement of environmental protections, perverse economic incentives, such as taxes and subsidies that drive conversion for agriculture, and so on. 

Meanwhile project-based approaches have a long history of innovation in the voluntary carbon markets, with knock-on benefits for the entire carbon finance sector. Scaling up demand for REDD+ via the voluntary carbon markets should be an additional source of finance on the road to achieving jurisdictional outcomes, especially if nesting can provide a bridge between the innovation and targeted finance that projects can deliver, and the scale needed from jurisdictional REDD+. 

Moreover, territorially based REDD+ projects developed in partnership with IPLC are often well positioned to deliver benefits directly to IPLC. These benefits are not necessarily small-scale in nature, either; project-based REDD+ can reach significant scale considering the large territories owned by IPLCs. In the Amazon alone indigenous peoples control over 210 million hectares 

Innovations are still needed both in jurisdictional and project-based nested REDD+ to channel finance to areas with high forest cover and historically low deforestation (HFCLD), given that many of those places are increasingly at risk. REDD+ mechanisms need to better engage and benefit IPLCs with a track record of successfully protecting their forests. One path forward is for HFCLD to be seriously considered as a category for jurisdictional and project-based REDD+, although we recognize this requires resolving a number of technical limitations, particularly around how to treat additionality. 

REDD+ can’t work in the absence of inclusive and just partnerships with indigenous peoples and local communities, the planet’s best guardians of forests. 

First and foremost, jurisdictional REDD+ programs must take seriously the history of mistrust and conflict between IPLC and governments, and lingering concerns about whether governments will be good partners to IPLC. The mission to protect tropical forests, including REDD+, depends very much on IPLC: One-third of tropical forest carbon stored aboveground in the Amazon Basin lies within indigenous territories. In MesoAmerica, that share rises to nearly one-half, 31.4% in the Democratic Republic of Congo, and 36% in Indonesia. Not taking the time to build reciprocal relationships would be a substantial missed opportunity for both IPLC and jurisdictional programs, and a blow to global efforts to protect tropical forests.  

What does good partnership look like? It depends on the community, but some general principles can be established. Jurisdictional systems must clearly define, respect, and directly compensate the carbon ownership rights of IPLCs through benefit sharing mechanisms that are co-designed with IPLCs, including strong safeguards and FPIC. Jurisdictional mechanisms’ funding and policies cannot criminalize IPLC by forced removal from their lands, and must recognize and respect (via safeguards) traditional knowledge and cultures of indigenous peoples. REDD+ performance metrics also need to be culturally appropriate and co-designed with IPLCs. In addition, jurisdictional systems must provide for independent grievance mechanisms for IPLCs and other stakeholders. 

There are other ways in which jurisdictional REDD+ can better encourage IPLC participation. For example, clarifying whether indigenous territories can themselves be jurisdictions under many existing standards. Jurisdictional systems can also find ways to decrease the complexity and cost of validation and verification standards so that more IPLC territories can participate, so long as these efforts are delivering high integrity emissions reductions and fulfilling the Cancun safeguards. Doing so would  reduce the high barrier to program entry and increase the area of forest eligible for credible offsets.  

Finally, although jurisdictional REDD+ is shifting toward performance-based payments, donor governments must keep investing in governance and readiness in IPLC. Significant support is still needed to increase the capacity of IPLCs to adequately respond to REDD+ opportunities. The cost of this capacity building cannot be expected to come solely from philanthropic cooperation, but rather be a central cost in architecture and design of jurisdictional programs. 

Project-based REDD+ should of course abide by similar principles of FPIC, recognition of IPLC carbon rights and cultures, appropriate compensation, and including IPLC in design and implementation of benefits-sharing when their projects involve IPLC territory.  

More to the point, if IPLC believe their best opportunities lie in designing, implementing, and benefitting from their own REDD+ projects nested within or independent of jurisdictional programs (with questions of carbon accounting being appropriately addressed), they have every right to do so.  

Looking forward, our team will remain active partners and participants in the REDD+ space – providing data, thought leadership, opportunities for consultation and coalition-building between diverse stakeholders, demonstration where appropriate, and sustained and creative advocacy with key decision-makers in climate finance. We welcome new collaborators in this work, always. REDD+ is too important a piece of the climate solution portfolio; we need to get it right. 

(This blog first appeared on Forest Trends’ blog: Viewpoints on 25 August 2021)

Mobilizing Large-scale Climate Solutions from the Forest Sector, Introducing TREES 2.0
EM Strategic Supporter Insights

24 August 2021 | The Architecture for REDD+ Transactions (ART) has released an expanded and enhanced version of The REDD+ Environmental Excellence Standard (TREES) for measuring, monitoring, verifying and crediting climate progress in the forest sector. The updated version – TREES 2.0 – broadens opportunities to unlock large-scale solutions from forests in support of efforts by the international community to achieve the ambitious goals in the Paris Agreement.

In the fight against climate change, the urgency of reducing deforestation, restoring and regrowing forests and protecting intact ecosystems in areas with low historic rates of deforestation is well understood. Scientists estimate that these natural climate solutions can provide one-third of needed climate action this decade.

The Paris Agreement paved the way for large-scale climate solutions from forests by endorsing international cooperation to protect and enhance forest carbon stocks and reduce emissions from deforestation and forest degradation, collectively known as REDD+. However, a major barrier to mobilizing large-scale finance has been the lack of a high-integrity, standardized approach for the measurement, monitoring, reporting, verification and crediting of emission reductions and carbon removals from forests at a jurisdictional scale, including the assurance of environmental and social safeguards.

ART was created to meet this challenge with the objective of attracting finance at scale to support ambitious climate action in the forest sector by countries and large sub-national jurisdictions (such as provinces or states) by ensuring that TREES emission reduction and removals credits are comparable across jurisdictions and fungible in carbon markets with credits from other sectors. The first version of TREES, released in 2020, focused on ensuring the integrity of credits for emission reductions from reduced deforestation and forest degradation – the most urgent priority for the forest sector.

TREES 2.0 includes innovations to broaden access to and activities covered by forest carbon crediting, while maintaining rigorous safeguards. TREES 2.0 expands options for participating jurisdictions to access carbon market financing by including crediting for additional mitigation actions from the forest sector notably (i) protecting forests in jurisdictions with high forest cover and low rates of deforestation and (ii) enhancing carbon ‘removals’ due to reforestation and forest restoration efforts. It also creates a pathway to recognize the contributions of Indigenous Peoples to protecting forests and reducing associated emissions.


  • TREES 2.0 expands jurisdictional-scale crediting for forest restoration and the establishment of new forests – which remove carbon from the atmosphere – adding another critical solution to help drive transformational change in the forest sector and achieve the goals of the Paris Agreement.
  • TREES 2.0 adds an innovative crediting approach for jurisdictions that have historically protected their forests. These are areas that have high forest cover and low levels of deforestation (also known as High- Forest, Low Deforestation (HFLD) jurisdictions). Incentivizing jurisdictions to keep their forests standing creates a more effective and equitable global system for forest protection and restoration.
  • TREES 2.0 creates a new opportunity for Indigenous Peoples – who provide a critical global service as effective forest protectors – to contribute and benefit. Indigenous Peoples territories are eligible to aggregate as subnational accounting areas as part of a national submission to ART to meet the required scale threshold. In addition, these subnational Indigenous Peoples territories are eligible to qualify as HFLD and therefore elect to use the TREES 2.0’s HFLD crediting approach to better reflect their historical performance in protecting their forests.

ART has also clarified requirements to avoid double counting and improved requirements around uncertainty, while also enhancing clarity for how project-level activities can fit within a jurisdictional approach, as well as how TREES operationalizes the social and environmental safeguards defined by the United Nations Framework Convention for Climate Change (UNFCCC) for the implementation of REDD+ activities – known commonly as the Cancun Safeguards.


  • TREES 2.0 clarifies provisions to avoid double counting under the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) and the Paris Agreement’s Article 6.2 (which provides an accounting framework for international cooperation to achieve national climate goals). It also clarifies situations in which credits issued for use in domestic compliance markets may not be considered double issued with TREES credits.
  • ART has also clarified that while ART does not directly credit projects or similar smaller-scale activities, ART recognizes that Participants will work with the private sector, Indigenous Peoples and local communities (IPLCs) and other stakeholders to design and implement successful REDD+ programs. To complement TREES 2.0, ART recently published a paper detailing Options for Nesting Under ART.

Despite universal agreement on the essential role of forests in achieving the goals of the Paris Agreement and reversing the worst effects of global warming, they are being lost at alarming rates. We urgently need to mobilize capital at scale for protecting and restoring tropical forests. By expanding access to carbon market finance, our goal with TREES 2.0 is to unlock such large-scale action from the forest sector.

A Bright Spot in the IPCC’s Dire Climate Warning

Photo: ‘Changing’ by the artist Alisa Singer “As we witness our planet transforming around us we watch, listen, measure … respond.”

11 August 2021 | The Intergovernmental Panel on Climate Change (IPCC) had a simple message for the world this week: “Climate change is widespread, rapid, and intensifying,” is how it unveiled the first installment of its 6th major assessment report.

Specifically, we’ve pushed carbon dioxide to levels not seen in 2 million years, and we’ve driven temperatures to levels not seen in more than 125,000 years – and, yes, it’s clearly we who are doing it and not sunspots or other natural phenomena. The science is “unequivocal” – another term the IPCC used for the first time.

Beyond the doom and gloom, however, there’s a bright spot: temperatures will stabilize somewhere between 1.5 and 2 degrees Celsius over pre-industrial levels if we get to net zero emissions within the next few decades, and they can fall back if we scale up both natural and technological systems for removing greenhouse gases from the atmosphere – from carbon sequestering trees to industrial carbon capture and storage (CCS) technology.

It might be too late to prevent the seas from rising, but it’s not too late to save civilization.

If we do nothing, however, the planet’s living ecosystems will lose their ability to mop up greenhouse gasses, and our agricultural economy could collapse.

None of these findings are new, and they’re even a reason groups like the Net Zero Asset Managers initiative are pushing corporate pledges to achieve “net zero” emissions by 2050. At net zero, companies have decarbonized to the extent possible and are offsetting residual emissions through removal mechanisms like tree planting and CCS.

The danger, of course, is that companies will fixate on 2050 with the aim of starting to reduce in 2040 instead of now. That’s why those pushing for pledges are also calling for interim reduction targets.

These groups, however, are also giving short shrift to the concept of “carbon neutrality”, which is a critical tool for accelerating reductions to net zero.

Carbon neutral is where companies can be now, while they’re still in the process of decarbonizing on their way to net zero.

While net zero means eliminating fossil fuels and then only using offsets that remove greenhouse gases from the atmosphere, carbon neutral means companies are offsetting while they transition to new technologies, but they’re not limited in the types of offsets they can use. Instead of only using offsets that remove greenhouse gasses from the atmosphere, they can also use those that reduce emissions elsewhere – by, say, protecting endangered forests or funding low-emission technologies.

The two approaches are, in other words, not mutually exclusive and can run in parallel. Ideally, a company that is on a net zero aligned pathway to reduce its own emissions to the extent possible by mid-century will purchase offsets along the way to be carbon neutral in the near term.

This is critical, because it’s easier and cheaper to prevent these gasses from getting into the atmosphere now than it is to suck them out later. Natural climate solutions are still key, because human management of forests, farms and fields generates nearly a quarter of all man-made greenhouse gas emissions.

Those who ignore – or, in some cases, actively oppose – the use of carbon credits to become carbon neutral in the near-term often do so because they feel it’s a distraction from the ultimate goal of achieving net zero emissions.

It’s not.

It’s a way of getting there sooner.

New partnership with UN aviation agency to provide insights on carbon offsetting market
Press Release


05 August 2021 | As more than 100 countries sign on for the pilot phase of a new international carbon offsetting mechanism for the aviation industry, the International Civil Aviation Organization (ICAO) and the carbon offset trade reporting initiative Ecosystem Marketplace have entered into a new partnership aimed at facilitating the transparency of the transaction of carbon credits eligible for airline offsetting under ICAO’s Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA).

“Transparency has been fundamental to the design and implementation of CORSIA since its inception, and the ICAO Council welcomes this Ecosystem Marketplace agreement aimed at addressing its expectations for reliable data and analysis on the status and evolution of associated carbon markets,” highlighted ICAO Council President Mr. Salvatore Sciacchitano. “As things proceed we see CORSIA and other ICAO initiatives’ contributing to more and more voluntary commitments by aviation stakeholders to ambitious climate goals, including net zero targets.”

Through ICAO, States have agreed to an aspirational goal of carbon neutral growth from 2020. CORSIA contributes to the achievement of this, complementing a broader package of aviation CO2 reduction measures, such as technological innovations, operational improvements, and sustainable fuels. International aviation currently accounts for less than two percent of global CO2 emissions, but emissions from international air transport are expected to grow considerably in the coming decades. Climate impacts from aviation, with the exception of international air traffic, are addressed under States’ Paris Agreement commitments. To complement their Paris Agreement objectives, States have also committed to addressing emissions from international air traffic through agreements facilitated by ICAO, a UN agency.

CORSIA sets a baseline for emissions from international air traffic and requires airlines to offset emissions in excess of that baseline by purchasing high quality offsets that are subject to stringent eligibility criteria. It is part of a broader package of measures to achieve the ICAO global aspirational goals for international aviation.

“This encouraging new partnership with ICAO marks an important milestone for Ecosystem Marketplace and the aviation sector,”  said Stephen Donofrio, Director of Ecosystem Marketplace. “As CORSIA is a global scheme governed by a regulatory compliance model, the market data transparency resulting from this agreement will play an essential role in the sector’s pathway towards decarbonization, including complementary voluntary efforts.”

Ecosystem Marketplace (EM), an initiative of the nonprofit organization Forest Trends, acts as a market reporting and public information platform to ensure transparency and integrity, from supply to demand. EM’s new Global Carbon Hub, launched in early 2021 in response to growing demand for market data, expanded information services to include a dynamic, near-real time data dashboard and meta-registry.

Through the new partnership, EM will leverage its 16 years of experience reporting prices and volumes of carbon trades to offer new market data for offsets eligible for ICAO’s Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA). ICAO will use this information to regularly inform States and the general public as part of the efforts of the Organization to enhance transparency and market confidence vis-à-vis CORSIA implementation. Beginning in Q3 2021, ICAO will integrate Ecosystem Marketplace data of CORSIA-eligible emissions units into its CORSIA public website and the monthly CORSIA newsletter shared with 193 Member States. Ecosystem Marketplace will also make the data available on its Global Carbon Hub Data Intelligence & Analytics Dashboard.

“ICAO and its Member States would benefit from information and analysis related to carbon market and CORSIA to be provided by Ecosystem Marketplace, a neutral third party nonprofit organization”, highlighted ICAO Director, Air Transport Bureau, Mohamed Rahma. 

“Forest Trends’ position has long been that carbon markets and other forms of climate finance need transparency and integrity if they are to deliver real results at the scale needed to meet Paris ambitions,” said Michael Jenkins, CEO and Founding President of Forest Trends. “I am delighted to embark on this  new partnership with ICAO.”


Ecosystem Marketplace (www.ecosystemmarketplace.com) is an initiative of the non-profit organization Forest Trends, and a leading global source of information on environmental finance, markets, and payments for ecosystem services. As a web-based service, Ecosystem Marketplace publishes newsletters, breaking news, original feature articles, and annual reports about market-based approaches to valuing and financing ecosystem services. We believe that transparency is a hallmark of robust markets and that by providing accessible and trustworthy information on prices, regulation, science, and other market-relevant issues, we can contribute to market growth, catalyze new thinking, and spur the development of new markets and the policies and infrastructure needed to support them. Ecosystem Marketplace is financially supported by a diverse set of organizations including multilateral and bilateral government agencies, private foundations, and corporations involved in banking, investment, and various ecosystem services. 

A specialized agency of the United Nations, ICAO was created by governments in 1944 to support their diplomacy on international air transport matters. Since that time, countries have adopted over 12,000 standards and practices through ICAO which help to align their national regulations relevant to aviation safety, security, efficiency, capacity and environmental protection, enabling a truly global network to be realized. ICAO forums also provide opportunities for advice and advocacy to be shared with government decision-makers by industry groups, civil society NGOs, and other officially-recognized air transport stakeholders.


Media contact: Genevieve Bennett, +1 202 298 3007, gbennett@forest-trends.org  

An Amazon Bioeconomy is a Path Forward for Brazil

Originally published on the Forest Trends Blog “Viewpoints” (June 30, 2021)

Attacks on indigenous territories by land grabbers have been increasing in recent weeks in Brazil. Land conflicts in general have reached a troubling milestone – 1,576 cases in 2020 – the most since the Pastoral Land Commission began recording in 1985 and 25% higher than the number of cases in 2019. Land invasions also broke records, more than doubling in 2020, with indigenous peoples representing 72% of recorded cases. This, combined with the resignation of Brazil’s Minister of Environment Ricardo Salles following allegations of illegal timber smuggling, further highlights how volatile and urgent things have become on the forest frontier of the Amazon.

The continued increase in deforestation and environmental destruction throughout the Brazilian Amazon is clear evidence that the path of development to date has been ill-conceived. However, both Federal and regional governments need to conciliate economic growth to benefit the millions of Brazilians who live in this vast region. The challenge and opportunity Brazil currently faces is to achieve this with private investments while promoting the overall conservation of the Amazon and supporting thousands of indigenous and other traditional forest communities.

Creating the right policies, markets, infrastructure, and innovative connections is urgently needed to set a new course for sustainable, inclusive, and environmentally sound development. The bioeconomy of the Amazon, or “Amazon 4.0” as it has been called by Carlos Nobre, member of the Brazilian Academy of Sciences, is a promising pathway for the Brazilian Amazon. The New York Times described this new pathway for the Amazon as harnessing the technologies of the fourth Industrial Revolution. As a prominent economic force and the world’s largest forest country, Brazil is strategically positioned to be a global leader in shaping and modeling a new way of doing business, a challenge and opportunity as countries slowly turn to post-pandemic recovery.

As deforestation rates continue to soar in the Amazon, regional governments are under pressure to control forest loss and deliver economic growth, both which currently rely primarily on forest conversion for agriculture and livestock production. This puts immense pressure on the forest frontier and the indigenous communities living on the other side. As the frontline against further forest loss, indigenous peoples are critical contributors to the conservation of intact forest landscapes, benefitting both biodiversity conservation and national climate commitments. Indigenous territories experienced 0.1% net carbon loss from 2003 to 2016 – the lowest rates of any protected area in the Amazon. One-third of the Amazon’s carbon stocks are located in indigenous territories.

Over two decades partnering with indigenous peoples has taught Forest Trends that long-term collaboration and supporting indigenous communities is the best way to stabilize the forest frontier – doing so both helps them defend their forests from illegal activities and strengthens sustainable forest economies of their choosing. There is a balance to be struck between land stewardship and its sustainable use, one that indigenous peoples around the world have practiced for generations.

Traditional Amazon systems have been based on diversity, not monoculture, taking advantage of a multitude of crops and wild-harvested foods, drawing carefully on different forest types and cultivated areas, and keeping the overall landscape intact. The “Amazon Bioeconomy” we are proposing mimics traditional Amazon management systems with potential to create a diversity of supply chains based on the incredible natural wealth of the region.

The current model relies on single-product economies, such as beef, soy, or palm oil. The consequences of failing to change this practice are dire and will only get worse, as highlighted in our recent report, Illicit Harvest, Complicit Goods, which showed that at least 69% of the tropical forests destroyed for agricultural commodities between 2013 and 2019 was done so illicitly, in violation of national laws and regulations. Now is the time to focus market and consumer attention towards products that sustain forests and the communities living there, rather than those that drive forest loss.  These are local strategies with global impact, creating direct, measurable benefits for forest communities, and a safer climate for us all.

Is ‘net zero’ much ado about nothing?

Originally published on GreenBiz (May 11, 2021)

13 May 2021 | It feels almost quaint to remember way back when “80 by 50” — an 80 percent reduction in greenhouse gas emissions by 2050 — was a bold goal for a company or government entity to make. It was seen by many as audacious, possibly unachievable, but still a necessary target.

The “way back when” in this case seems to be around 2014.

Ah, yes: The good old days.

Today, “80 by 50” would not pass muster. Net zero is the near-universal goal of nations, states, provinces, cities, companies, universities and others. And even that goal sometimes gets knocked as being too little, too late.

The five questions below represent just a sampling of issues surrounding what net zero means — and doesn’t. These questions and others will be central to our upcoming (and free) VERGE Net Zero conference in July.

First, what is net zero?

For those not yet up to speed, net zero refers to the goal of emitting no greenhouse gases by a specific date, typically 2050. However, Germany just committed to reaching this goal by 2045. Corporate signatories to the Climate Pledge have committed to net zero by 2040. IBM said it would reach that milestone in 2030. The bar continues to move. Such commitments often are coupled with an interim goal of cutting emissions in half by, say, 2030.

The overriding question whether net zero will be largely a check-the-box activity or a truly disruptive force. The answer is up for grabs.

Net zero can be achieved, first and foremost, by cutting or eliminating greenhouse gas emissions and, secondarily, by offsetting any remaining emissions through such actions as planting trees, investing in renewable energy projects that replace fossil-fuel energy, or investing in novel carbon-removal technologies such as direct air capture.

The concept of net zero goes back nearly a decade, in the run-up to the 2015 COP21 climate conference in Paris. According to one telling, a group of female climate leaders met at a Scottish estate in 2013 to discuss bold climate goals that could be enacted two years later in Paris. After a heated debate, they agreed that the goal should be to pursue net zero by midcentury. In the Paris Agreement that ultimately resulted, negotiators agreed “to achieve a balance between anthropogenic emissions by sources and removals by sinks of greenhouse gases in the second half of this century.”

That is, to achieve net-zero emissions.

Is net zero the same as carbon neutral?

The terms are often used interchangeably, although there are subtle but critical differences. You can become carbon neutral simply by buying offsets — for a year’s worth of driving or air travel, for example. Net zero would require that you drive or fly as little as possible, offsetting only what’s unavoidable. The same principle holds for any other activity — for a company, building, factory, product, community or nation.

In some cases (as with ExxonMobil, for example), companies have committed to net-zero carbon intensity, a term that means that the amount of carbon per unit of measure does not increase, even as overall emissions may rise. Exxon has come under fire from activist investors for a stance that, critics say, disingenuously claims to be net zero but, in fact, will lead to an increase in overall emissions in the coming years.

Does net zero rely too much on offsets?

Companies are being increasingly criticized for investing more into offsets than into actual emissions reductions. That is, simply buying offsets in lieu of any emissions reductions is taboo. But, given that there is no universal standard about how much offsetting is the “right” amount, it’s an open field for organizations to claim pretty much whatever they want. But that could change. The Science Based Targets initiative is working on what it calls “the first global standard for net-zero business.”

Is net zero achievable with existing technologies?

Most experts believe we have the technologies, although some are not yet cost-competitive.

But many are. Cutting energy use — the first step in reducing emissions — relies on a sizable toolbelt of well-oiled energy-efficiency technologies with relatively fast returns on investment. The next steps are harder, however. Electrification — transforming cars, buildings, factories and other things to operate on electricity rather than, say, oil or natural gas — is a fast-emerging field. And affordable, enabling technologies — electric vehicles and grid battery storage, among them — are quickly coming to market.

Beyond that is carbon capture, a portfolio of technologies that remove greenhouse gases from the atmosphere and store them securely for decades or centuries, including in products such as concrete. And there are carbon-free fuels that show great promise, such as blue and green hydrogen, but that are still nascent and expensive.

Is net zero greenwash?

Some think so. Critics say that the overreliance on offsets and unproven technologies, combined with the roughly three-decade time horizon to achieve most net-zero goals, enable companies to continue business as usual for the foreseeable future while still maintaining a net-zero stance. As a result, as I noted a couple months back, net zero may be in for a backlash.

“Far from signifying climate ambition, the phrase ‘net zero’ is being used by a majority of polluting governments and corporations to evade responsibility, shift burdens, disguise climate inaction, and in some cases even to scale up fossil fuel extraction, burning and emissions,” stated the watchdog group Corporate Accountability, which published a report last fall on “How ‘net zero’ targets disguise climate inaction.”

“The term is used to greenwash business-as-usual or even business-more-than-usual,” it continued. “At the core of these pledges are small and distant targets that require no action for decades and promises of technologies that are unlikely ever to work at scale, and which are likely to cause huge harm if they come to pass.”

Activists, including investors, aren’t likely to accept any old net-zero commitment without holding it to intense scrutiny. For companies, that means the bar likely will rise over time.

The overriding question, at the end of all this, is how companies and others will lean into their net-zero commitments in the years ahead — whether they will be largely check-the-box activities or a truly disruptive force. Right now, the answer is up for grabs.

These are among the issues worth pondering, debating and embracing. Indeed, they’ll be front and center at our upcoming Net Zero event.

Nothing less than our lives and future rest on the answers.

Photo: GreenBiz photocollage, via Shutterstock

Chocolate Companies are Changing to Make Cocoa Ethical

The economic disruption to many sectors from the COVID-19 pandemic is a strong reminder that consumer markets can change drastically in response to social and environmental drivers. COVID-19 has caused major financial losses for some industries, while driving demand for products like hand sanitizertoilet paper, and chocolate. If you’ve been feeling a stronger-than-usual inclination to drown out stress in some sweet, chocolatey goodness this past year, you’re not alone. Chocolate sales rose by over 5% between March and August of last year, and sales of premium chocolate increased by almost 13% compared to sales in 2019, according to the National Confectioners Association.

Unfortunately, chocolate purchases have inherent consequences for their far-reaching global supply chains. At the source, poverty is endemic in cocoa farming communities, almost all of which are smallholders. These smallholders, while integral to chocolate production, receive only 7% of profit from end product chocolate sales (compared to the 44% and 35% received by manufacturers and retailers, respectively). The COVID-19 pandemic hasn’t helped matters as the global recession drives down cocoa prices. Poverty drives socially and environmentally harmful practices, such as deforestation and child labor in cocoa farming communities, which can have long-term negative impacts on financial performance and resiliency and for both cocoa farmers and corporate buyers.

What’s in your chocolate bar

Though cocoa originated in the rainforests of South America, today close to three-quarters of the world’s supply is grown in West Africa. Partially driven by cocoa production, many of the forests in West Africa have been cleared in the past 30 years, and what remains is a biodiversity hotspot (the Guinean Forests of West Africa), which is home to endemic and endangered species, like chimpanzees and forest elephants.

Poverty drives many farmers to employ their children (and occasionally trafficked child migrants from neighboring countries) on their cocoa farms, despite much of the work being dangerous and labor-intensive. Though child labor and deforestation may increase short-term income, these actions ultimately erode the resiliency and well-being of cocoa farming communities by damaging ecosystem services and future generations’ education prospects.

Companies that produce and sell cocoa products – especially public-facing consumer goods companies – have become wary of negative publicity linking their supply chains to deforestation and child labor. This publicity erodes public trust, has repercussions for the company’s purchasing relationships with vendors or clients and may create legal trouble. Several chocolate brands have already faced lawsuits over child labor in their cocoa supply chains.

Proliferation of promises with mixed follow-through  

A growing number of influential companies are taking steps to assess and mitigate the business risks posed by deforestation and human rights abuses in their cocoa supply chains. In a new report by Supply Change, Trends in the Implementation of Ethical Supply Chains, more than half of the 65 companies reviewed have made commitments to address deforestation or other sustainability issues in their cocoa supply chains. However, many companies have a way to go to implement these goals in ways that 1) cover all operational and souring locations, all suppliers, and all product lines, 2) are linked to ambitious time-bound targets to achieve zero gross deforestation, and 3) use appropriate cut-off dates for how recently cocoa produced on converted forestland is acceptable for the supply chain.

Eliminating deforestation in cocoa supply chains is particularly challenging the further down the supply chain you go. Cocoa farmers are typically separated from cocoa exporters and grinders by multiple intermediaries (e.g., cooperatives, small local traders, etc.). Traceability (tracking commodity volumes through different stages in the supply chain) and supply chain mapping (identifying all supply chain actors) are important components of cocoa policies, but identifying the individual farms and ensuring no deforestation or human rights abuses have taken place is still difficult for companies to achieve. Results from the new Supply Change report reflect this: just over half of companies (36) were aiming to achieve traceability to the farm level.

A menu of solutions

Credible certification systems with robust no-deforestation and human rights criteria are one way companies address this and ensure they are sourcing environmentally and socially responsible cocoa. Companies sourcing certified cocoa often require fewer resources to achieve farm-level traceability, monitoring, and supplier engagement goals. The largest certifier of cocoa, Rainforest Alliance/UTZ, certified over one million metric tons of cocoa in 2019. Their process includes regular evaluations and audits of the farmers they certify to ensure that they abide by environmental and social standards that align with sector-wide expectations for best practice.

However, many companies choose to trace cocoa supplies to the farm level and/or engage with suppliers on sustainability issues on their own, rather than relying on a certification standard alone. In fact, Supply Change found that 68% of companies (44/65) engaged with their suppliers and encouraged compliance with trainings and workshops or high-quality resources (e.g., cocoa trees, fertilizer, etc.). Although about one-third of companies had policies for responding to suppliers that were not compliant with their commitment, few disclosed detailed criteria for suspending, excluding, or reinstating suppliers, and few required time-bound resolution plans for suppliers to achieve compliance.

The Cocoa & Forests Initiative (CFI) is one collaboration that is driving action on cocoa-driven deforestation, especially through farm-level traceability and supplier engagement. CFI is a multi-stakeholder platform established by the World Cocoa Foundation and the IDH Sustainable Trade Initiative, which brings together the national governments of Côte d’Ivoire, Ghana, and recently Colombia; 35 companies (almost all of which are major cocoa buyers, including Mars – see below); and various environmental organizations to collaborate and implement complementary actions to eliminate cocoa-driven deforestation.

Civil society groups are working to provide tools that companies can use to develop and implement policies to address cocoa-driven deforestation beyond collaboration with CFI. For instance, the environmental advocacy organization Mighty Earth is supporting companies by addressing monitoring and traceability gaps through its interactive Cocoa Accountability Map of over 2,000 cocoa cooperatives in Côte d’Ivoire and proximate deforestation. A growing number of companies are using the Accountability Framework to identify and align their cocoa policies, commitments, and actions with the best practices recommended by leading civil society groups. In fact, Supply Change identified six companies – including top cocoa buyers like Cargill, Barry Callebaut, and Mars – that explicitly described using the Accountability Framework to align their definitions and approaches on supplier engagement, traceability, and measuring progress. It is suspected that more companies are doing the same without public disclosure.

Company Spotlight: Mars

Mars, one of the largest manufacturers of chocolate products in the world, sources around 400,000 metric tons of cocoa annually, or about 8% of the cocoa produced worldwide in 2020-2021. Mars is also one of the largest privately-owned companies in the United States and manufactures well-known chocolate brands like M&Ms, Snickers, and the eponymous Mars Bar.

The company has prioritized addressing deforestation and child labor in its cocoa supply chain in recognition of the fact that cocoa is integral and irreplaceable to its brand; Mars has a target to source 100% from deforestation-free cocoa by 2025, plus goals to improve cocoa farmer incomes, eliminate child labor, and reduce greenhouse gas emissions in its cocoa supply chain.

Nonetheless, Mars still has areas in which it could improve its cocoa policies. The 2021 Easter Chocolate Scorecard, which was produced by Green America, Mighty Earth, and Be Slavery Free, acknowledged Mars’ above progress but noted that they needed improvement in areas such as transparency and traceability, agroforestry, and livable incomes for farmers.

A key aspect of Mars’ strategy is supply chain mapping and tracing all cocoa volumes from the final product back to individual farms. In 2019, Mars released the names of all of its direct (“tier 1”) suppliers, and in 2020, the company released the names of all the farm groups (“tier 2”) in its supply chain. As of 2020, Mars was able to trace one-third of its cocoa to a farm boundary, allowing satellite monitoring and third-party auditors to detect forest loss and protected area encroachment.

Mars’s actions to address deforestation have been facilitated by the growing infrastructure of tools and initiatives. Mars is a signatory to the Cocoa & Forests Initiative, and is currently taking steps to achieve the targets laid out in its action plan. The development of their cocoa policy, including definitions and best practices, were also informed by the Accountability Framework.

What’s Next for Ethical Cocoa?

Though not as sudden or drastic as the changes inflicted by the COVID-19, environmental and social factors from cocoa production are shifting consumer markets for cocoa and chocolate products. The new report by Supply Change indicates that a number of influential companies have no-deforestation commitments for their cocoa supply chains, and are implementing strategies to trace their cocoa supply, engage with suppliers, and source certified-sustainable cocoa. However, company actions often fell short of full alignment with the best practices outlined in the Accountability Framework. For many companies, opportunities to improve their alignment with the Framework will involve more detailed reporting on approaches for assessing risk and resolving non-compliance issues with suppliers, time-bound targets for achieving no-deforestation, and establishing cut-off dates for forest conversion.

Alignment with the Accountability Framework, which recommends best practices for addressing commodity-driven deforestation in supply chains, is a useful benchmark for companies to know that they are approaching cocoa-driven deforestation effectively. As pressure grows from consumer preferences and due diligence requirements by import countries, companies that can demonstrate success in achieving ethical supply chains will have a competitive edge in consumer markets and incur fewer costs from issues such as regulatory fines and lawsuits.

Given the complexity and opacity of cocoa supply chains, individual company actions can only go so far in reducing negative impacts on forests and farmers. Thus, corporate engagement with multi-stakeholder initiatives, such as the Cocoa & Forests Initiative, that boost collective development of farm mapping, satellite monitoring tools, and programs to help farmers is key for all companies to achieve their commitments. This harkens the proverb, “if you want to go fast, go alone; if you want to go far, go together.”

Compared to the palm oil and timber sectors, awareness and engagement from companies on deforestation from cocoa production are still nascent. Unsurprisingly, there is a learning curve for companies making and implementing commitments in cocoa supply chains, as shown by the mixed uptake and reporting around best practices. Though there are a growing number of tools and initiatives to support companies, many are in their first few years, and the impacts are still unclear. As companies make progress toward building ethical cocoa supply chains, tools like the Accountability Framework will be crucial to driving positive outcomes for people and forests in cocoa-producing regions.

To learn more about how the Accountability Framework has been used in the two years since its launch, visit https://accountability-framework.org/2-year-anniversary/

The author would like to thank Kate Ellis, Philip Rothrock, Stephen Donofrio, and Leah Samberg for their contributions. This post is the first in a series on the cocoa supply chain. Look out for the next installment in the coming weeks!

Opinion: Voluntary Carbon Markets Do What the UN Cannot

27 June 2021 | United Nations climate boss Patricia Espinosa had her game face on at mid-year climate talks, which wrapped up June 18 after more than two weeks of online negotiations.

“While a significant amount of work remains, good progress has been made on many issues,” she told reporters.

That may be, but it’s not the case with carbon markets, where negotiators have simply dug into the same positions they’ve held for years.

“The mindset of engagement will need to change if progress on difficult issues is to be achieved this year at Cop26,” said Tosi Mpanu Mpanu, chair of the Subsidiary Body for Scientific and Technological Advice (SBSTA), in the closing plenary.

To promote a positive outcome at the November climate talks in Glasgow (COP26), the United Kingdom will gather 40 ministers on July 23rd in London to discuss carbon market issues. These talks will be led by the ministers of Singapore and Norway, two countries that themselves also want to utilize carbon markets.

Sadly, I doubt this will ultimately provide the clear guidance countries seek.

That’s because climate talks are politically sensitive, with many competing interests, and the arguments that keep blocking progress have little if anything to do with the technical issues involved in creating a robust global carbon market.

Put simply: that’s not what the United Nations is good at, and it’s not something they should be trying to do. The UN should limit its work to establishing accounting rules and the rules for reporting by countries, but leave the nitty-gritty issues up to individual countries and voluntary carbon markets.

There is precedent for this: the European Union has built a thriving market on the Kyoto Protocol’s Clean Development Mechanism (CDM) – namely, the European Union Emissions Trading Scheme (EU ETS) – despite the UN’s inability to correct the well-documented problems of the CDM itself. That’s because the UN did what it does best – creating basic universal rules – but letting the European Union develop its own market within those rules. At the same time, voluntary carbon markets have evolved quite nicely without micromanagement, and they even pioneered many of the practices governments are now implementing around the world.

Unresolved Issues

The UNFCCC left plenty of unresolved issues on the table, many of which are delineated in an informal note published at the end of the event. Here is a breakdown:

  • Guidance for nations that want to trade surplus emission reductions, called “Internationally Transferred Mitigation Outcomes” (ITMOs) under Article 6.2 of the Paris Agreement. other than transparency and double-entry bookkeeping, so that it is clear reductions are counted only once and by one country to comply with an obligation. The ITMO transferring country is to ‘correspondingly adjust’ (CA) the emissions reductions from its report. See how Switzerland and Peru are preparing to meet such demands in their recent CO2 deal.
  • Guidance on how a new centralized carbon credit program can ensure global reductions and learn from flaws of the CDM (Article 6.4 of the Paris Agreement).
  • The fate of the remaining billions old Kyoto-period CDM credits. I would propose to cancel one-third, bailout one-third, and transition one-third to the more ambitious Art 6.4 mechanism.

Here is a summary of the views that I saw resurfacing throughout the talks, as well as my comments on what they mean:

Expressed View: ‘Let’s wait with decisions on Articles 6.2. and 6.4 until there is more progress on ‘non-market-based options’ (Article 6.8).

My Take: Why wait? Countries are free to choose any option they prefer, and we don’t need to have all alternative approaches finalized before using carbon markets.

Expressed View: ‘We should apply share of proceeds (SOP) on Article 6.2′.

My Take: That demand doesn’t make sense. It is fair to apply a fee on a credit mechanism like Article 6.4, as was the case with the CDM to collect funding for adaptation, but adding a fee to each ITMO transfer burdens the trade and is not needed as nations that make use or cross border trade and regional emissions trading systems usually already donate to the Adaptation Fund with revenues of auctioning trading system allowances.

Expressed View: ‘We should wait for guidance on carbon trade until developing countries are transparent on the implementation of the Paris Agreement and how they meet their targets.

My Take: Without any support, it is hard for developing countries to report on all their emissions for the first time and to predict how and if they will meet their National Determined Contribution (NDC) target. Against this background, it’s difficult to correspondingly adjust IMTOs from their account. There are exceptions, of course. It’s worthwhile for some more advanced developing countries like Peru, which is establishing an emissions budget to track progress and wants to operate an ITMO transfer registry, but that is the exception. For others, there is the international meta registry that Markit is preparing and the voluntary carbon market, which establishes transparency of emissions and reductions that help meet their national target. (Editor’s notes: other efforts to unify registry data are underway including the World Bank’s Climate Warehouse and Ecosystem Marketplace’s complementary build-out of its trade accounting and reporting platform EM Global Carbon Survey). In my view, the voluntary carbon market (VCM) does not need to wait for UNFCCC decisions, as corresponding adjustments are designed to avoid double counting amongst countries and not among entities (see my earlier column on Ecosystem Marketplace on this).

Example of ITMO transfer between Peru and Switzerland

Countries can already make use of transferred mitigation outcomes under Article 6.2 as long as they are transparent and apply double-entry bookkeeping

More is expected outside the UN regime from a carbon club of countries that cooperate in making use of carbon markets to help meet CO2 targets or link their emissions trading systems. The EU Commission and the United States as well as Germany have indicated their interest in working with carbon clubs.

Also, the independent voluntary carbon market can help meet nations meet domestic CO2 targets. For example, investing in a cookstoves project in Tanzania can help Tanzania meet its NDC target. By purchasing voluntary carbon credits, companies can compensate for the impact of their remaining residual greenhouse gas emissions, in addition to reducing their own avoidable reductions, as this paper from the International Carbon Reduction and Offset Alliance (ICROA) makes clear.

New Report: Finance for Forest Carbon Doubled since 2016, but Still Far from Meeting its Potential as a Natural Climate Solution
Press Release

A new report from Ecosystem Marketplace, in collaboration with the Forest Carbon Partnership Facility of the World Bank, released today shows that funding to conserve and increase carbon stored in forests around the world has more than doubled between 2016 and 2019. But authors say forest carbon finance still falls far short of what’s needed to counter global forest loss and support increased climate ambition.  

Unless tropical forest loss is addressed in the next decade, the Paris Agreement goals are likely not achievable, according to the Intergovernmental Panel on Climate Change. The new report reviews a variety of forest carbon finance mechanisms that channel funds to forest protection and restoration. Research shows that forests and other natural climate solutions (NCS) are capable of cost-effectively providing up to one-third of climate mitigation needed by 2030, yet NCS currently receives less than 3% of climate mitigation funding. 

The report, State of Forest Carbon Finance 2021, which was supported also by Arbor Day Foundation and New Forests, provides a comprehensive overview of the current scale and outlook for three main mechanisms for forest carbon finance: compliance and voluntary carbon markets, and REDD+. In compliance carbon markets, parties buy and sell carbon offsets to meet regulatory obligations from governments. Voluntary markets also exist for actors who want to buy offsets to voluntarily reduce their carbon footprint. REDD+, which stands for “Reducing Emissions from Deforestation and Forest Degradation,” is a framework created by the United Nations Framework Convention on Climate Change to channel funding and support to developing countries to protect their forests. 

Key findings 

  • Funding for forests as of the end of 2020, channeled through carbon markets and results-based payments for REDD+, has more than doubled since Ecosystem Marketplace last reported in 2017. At least $5.9 billion flowed to forest carbon offset projects around the world, with an additional $1.3 billion disbursed or contracted for “REDD+ readiness” to support developing countries in protecting their forests. 
  • Compliance-driven forest carbon markets, such as New Zealand’s emissions trading system and the California-Québec cap-and-trade program, have driven more than $3.9 billion to forests and sustainable land use through the end of 2019 
  • Over the three years 2017-2019, almost $400 million was generated in global voluntary carbon market transactions trading 105 million metric tons of carbon credits (MtCO2e) from Forestry and Land Use, also referred to as NCSVoluntary carbon markets have generated nearly $1.4 billion to date in demand for NCS offsets, which dominates other offsets categories (such as Renewable Energy) in terms of overall transaction value.  
  • Voluntary carbon markets (VCM) are expected to soar over the coming years. The Taskforce on Scaling Voluntary Carbon Markets has estimated the VCM need to grow 15-fold by 2030 and 100-fold by 2050 in order to meet Paris Agreement ambition. Forest carbon finance from compliance-driven carbon markets is expected to reach even greater heights in the coming years, driven by new compliance mechanisms including the international aviation industry’s new carbon market, known as CORSIA, and international markets still under negotiation under Article 6 of the Paris agreement.
  • Despite the clear link between deforestation and climate change, and the financial risk posed by these issues, just 6% of companies researched by Ecosystem Marketplace of Supply Change data, its counterpart Forest Trends initiative, have integrated emissions reduction strategies with their deforestation commitments. 

Forest carbon finance outlook 

  • A stronger price signal is required to drive new development. The report shows that current prices range from $3 to $4 per ton for REDD+ credits in voluntary markets, $5 per ton via some compliance or REDD+ mechanisms, and up to a $10 floor price offered by the new LEAF Coalition. But authors say that prices will need to increase materially to drive the supply needed to meet expected demand. 
  • In the years ahead, REDD+ funding is poised to increase, with $3.5B in committed funding yet to be disbursed and an additional $1 billion pledged by the LEAF Coalition. The majority of these funds are dedicated for results-based payments, not readiness. New jurisdictional REDD+ offers potential for greater scale than traditional project-based approaches. But authors say that more needs to be done to ensure that jurisdictional mechanisms provide benefits for indigenous and local communities. 
  • The potential of forests within Nationally Determined Contributions (NDCs) to meet Paris Agreement targets remains largely untapped. Analysis shows that integrating climate cooperation through carbon markets into Article 6 and including REDD+ could almost double emissions reductions for the same total cost as a non-cooperative scenario for NDCs.  
  • Some in the environmental and business communities are concerned that a private-sector emphasis on removals (e.g., afforestation and reforestation projects) over reductions (e.g., avoided emissions via forest protections) could discourage a focus on stopping tropical deforestation. The report authors say that the environmental community needs to do more to address conflicting advice regarding the legitimacy of reduction-based credits to support private sector investment in REDD+.  

“Forest carbon finance is poised for tremendous growth in this decade, and yet in many ways, the marketplace and investment opportunities remain opaque, complex, and characterized by too much misinformation,” said Stephen Donofrio, Director of Ecosystem Marketplace. “This is the report to have on your desk to make sense of where this space stands currently, and where it’s moving.” 

“Carbon offsets are not a panacea,” says Patrick Maguire, Senior Manager of Ecosystem Marketplace. Companies and countries are certainly not going to offset their way out of the climate crisis. But they are a tool we can’t afford to underinvest in, especially if we’re going to meet interim 2030 targets. We know more public and private finance for forest carbon is urgently needed. This report shows it’s beginning to pick up, but also that we are still leaving a lot of potential on the table.” 

Download the report:


Media Contact:

Genevieve Bennett  |  +1 202 298 3007  |  gbennett (at) forest-trends [dot] org

Shades of REDD+
Corresponding Adjustments, Equity, and Climate Justice

The increasing commoditization of carbon markets makes us forget that behind these board room discussions, there is a real-world problem out there with the plight of real people at stake. While being an invention of the global north, carbon markets came with a great promise for us here in the South. The idea of backing voluntary claims with corresponding adjustments puts this promise at grave risk.

10 June 2021 | The fight for our future has to be fought, to a large extent, in developing countries as they move to enhance their human development indices and gross domestic product alike. The international principle of common-but-differentiated responsibilities carries the duty to support communities that battle increasing poverty and hardship on their journey towards clean energy and transport, sustainable land use, and healthy ecosystems. Carbon finance can play a big role in such a dispersed need-based compact. However, I see such an opportunity fade away in discussions around accounting technicalities of claims.

Demanding corresponding adjustments for voluntary carbon market transactions risks restricting voluntary investments within the boundaries of the developed world, (as these countries are the ones most likely to have an operational mechanism for adjustments in the near future) a concept which heavily undermines climate justice for the vulnerable. And we should all be very worried about that.

We need to reframe the discussion on corresponding adjustments and give it a human dimension

Just to be sure. I am all for integrity. However, corresponding adjustments for the voluntary carbon market are a lofty idea without much practicality. It has been a point of extensive discussions in the global north, where it apparently seems like a good idea to pile on more demands on developing countries and communities. This view may be the result of an appalling underrepresentation of countries that need voluntary finance in the plethora of task forces, consultations, and working groups mushrooming across the developed world, for a problem that largely affects the developing world. The ground realities seem very, very far removed from the conference room conversations, and just to be clear, the global south comprises roughly 150 countries, so a sweeping homogenous view is a problem. The result is as it always has been: The developed world sets the rules, and the rest of the world is forced to accept the bent logic supporting them. Let me make some points that should be considered when discussing corresponding adjustments for the voluntary carbon market.

The demand for corresponding adjustments is outright patronizing and fails to recognize the real needs of developing countries

The argument that developing countries would cut corners with their Nationally Determined Contributions (NDCs) if voluntary action is permitted without adjustments does not only sound extremely patronizing but also ignores the fact that governments generally welcome added private sector engagement to show them the way in setting their own action plans towards enhancing their NDCs via added knowhow of varied low carbon technologies and associated mitigation cost discoveries.

Additionally, a lot of NDCs in the least developed nations are conditional on finance. If the finance is indeed provided through voluntary action, the country is then asked to deduct those mitigation outcomes from their own NDC accounting systems. This seems a bit odd to most host country policymakers. A bureaucrat in one of the Least Developed Countries (LDCs) in Asia asked me the other day if they should have explicitly added private sector finance to the conditionality, as it appears that only donor finance from countries or multilateral bodies can count as conditional finance, even if it is a loan.

None of the developed countries seem to have a model for how to effect corresponding adjustments. How can we expect countries several notches below in bureaucratic system efficiency ratings to sort this out in five years or even ten years?

Setting deadlines for the requirement of corresponding adjustments seems a bit like putting the cart in front of the horse. Also, transition times do not solve the problem. The pundits seem to assume that carbon ‘markets’ are based on spot credits that are sold from projects that are on the ground already. This is not the case, and fewer and fewer projects will have credits ‘on the shelf’ ready to be sold. Most projects, in particular the much in focus nature-based solutions, require up-front investments for projects that remove or abate carbon over the next decades. Investment requirements that demand corresponding adjustments after a transition period as a condition for their finance, make such investments impossible, as no actor on the ground can commit to such adjustments being made.

Corresponding adjustments cement existing power structures and frustrate emerging calls for climate justice

Provisional commitments from countries to make corresponding adjustments in the future will not solve the problem. Obtaining such commitments may be possible for international organizations and highly funded international NGOs. It is impossible for smaller, local organizations to even start such a conversation. The risk is that power structures will further be solidified by limiting local actors to be part of “benefit-sharing” plans of larger organizations, throwing communities back into a never-ending quest for indigenous, inclusive, and rights-based climate action.

Try explaining to a struggling mountain community in Asia or a marginalized group of migrants in sub–Saharan Africa in a post-covid world, that their access to much needed and deserved finance is being held up by some form of accounting and claim issue. A lot of carbon programs are centered around communities which are at loggerheads with their governments, the very administration we are asking them to take adjustment approvals from.

Endemic corruption is another problem. Carbon markets are meant to put power into the hands of the vulnerable and for the private sector to show leadership in climate action, just to see the enlightened in the global north throwing these actors back to the feeding lions. Anybody who remembers the ordeals and challenges of obtaining a simple thing such as a Letter of Approval for the Clean Development Mechanism can testify to the challenges. That was just an acknowledgement of sorts with nothing to lose for the governments, here we are potentially asking for sovereigns to relinquish emission reductions that would otherwise contribute to their NDCs . Well, Good luck with that.

Carbon finance is fast, nimble, and desperately needed

In my experience, ambition was never the problem really, finance always was and is. The voluntary carbon market has mobilized almost a billion dollars last year alone and is expected to deploy another two to three billion in the next years. This is not insignificant. And we are talking about deployments and not pledges, an important distinction from public climate finance and associated rhetoric. This means that voluntary carbon finance is an essential piece of the puzzle towards achieving many countries’ NDCs. In my experience, developing countries welcome carbon finance as an alternate form of finance without red tape. This frees up public resources for them to support prioritized issues such as health and education. The enterprising nature of voluntary project developers to explore diverse project types, methodologies, and technologies make for an interesting perspective for most host countries. Official climate finance flows to the governments and takes years to reach the communities that need it most.

For example, the Green Climate Fund supports a project In India, one of four GCF projects for a country of 1.3 billion people. It took the project three years to be approved, and today, three years after the approval, only four percent of the approved budget has been disbursed. In contrast, we have conceptualized a project north of this project area with the same coastal communities in December 2020, it achieved financial closure by March 2021, investment agreements were in place in May 2021 and it will make first disbursements by July of this year. With a requirement for approvals on corresponding adjustments, these lead times could just go to ‘indefinite’ or for the project to not happen at all.

Government pledges cannot save us

Maybe, I can set one more point straight. The premise that only sovereign commitments can solve the climate crisis is fundamentally flawed. If governments were on track to solve this crisis, we wouldn’t really need voluntary action. It is because those pledges are often hollow and without accountability, is the reason why we are still experiencing the climate crisis. While we worry about corresponding adjustments for developing countries, we seem to be without any technocratic response for the situation where developed countries such as the US decide to exit the Paris Agreement or when countries slip back in their NDC commitments. There are multiple salient issues around the integrity of the Paris Agreement but the absence of corresponding adjustments for voluntary private investments is definitely not one of them.

Do not get me wrong. I am sure the calls for corresponding adjustments are all well-meaning, but the actors in this piece making these calls seem to be oblivious to the ruckus they are unraveling with increasing indecision and confusion in the markets. Recently though it must be said, it does seem like the integrity of private sector involvement has become more important than the issue of climate action itself with an overzealous investigation on claims and methodologies at the cost of risking losing private sector involvement altogether, as even well-meaning companies start fearing PR blowbacks

I repeat myself when I say I am all for integrity, of the voluntary markets, and of the Paris agreement, but we cannot have discussions around who can or who can’t receive much-needed financial support based on their federal mechanisms. That is just not fair. Governments will do what they have to do, and we must push them, but clearly, they do not have the capacity to deliver on all fronts. It is never an “and/or” battle, it should be everything that we have at our disposal, and that includes businesses, civil organizations and communities. We should make things as easy as it can get to have finance flow down to the needy and remove every possible roadblock. Time is running out! There is a real-world out there that needs all the support we can muster.

Photo: VNV Advisory Services

Illegal agriculture is the main reason we’re still losing forests. Is a crackdown coming?

Tropical deforestation’s threat to climate security is well understood by now. It is also a major obstacle to biodiversity conservation, human rights, preventing the emergence of novel zoonotic diseases like COVID-19, and the Sustainable Development Goals. Forest Trends helped to put agriculture-driven deforestation on the map in 2014. Our new report, Illicit Harvest, Complicit Goodsexpands the knowledge base further, by benchmarking the state of illegal deforestation for commercial agriculture around the world.

Forest Trends talks a lot about the distinction between legal and illegal deforestation. It’s not an academic point: illegal deforestation requires a different set of strategies to stop. It is also not a victimless crime. “Illegality” can mean a range of bad behaviors, from forest conversion that happens without appropriate permits; clearing protected species or on protected lands; paying bribes; not paying taxes or fees; illegal use of fi

re; right on through to land grabbing and human rights abuses of local forest communities.

Our new study shows that not only is the majority of land clearing for products like beef, soy, palm oil, and cocoa illegal, but it is getting worse. These are not the results we wanted to see. But it is important data for governments and businesses committed to stopping deforestation.

Some key findings from the report:

Illegal land clearing for commercial agriculture is the largest component of tropical deforestation–and is getting worse.

At least 69% of tropical agro-conversion (the conversion of forests to pasture or cropland) was conducted in violation of national laws and regulations over the period 2013-2019. That’s at least 31.7 million hectares over the 7-year period (roughly the size of Norway), or at least 4.5 million hectares per year.

In Brazil, at least 95% of all deforestation was illegal. Indonesia’s Supreme Audit Agency found that more than 80% of palm oil operations were out of compliance with national laws and regulations.

The area of illegal agro-conversion has increased since we first looked at it seven years ago.

More forest land is being illegally cleared to make way for agricultural crops and pastures than ever before. Some numbers: the average annual loss of 4.5 Million hectares per year is an increase of 28% over the amount reported from 2000-2012 (3.5 Mha per year).

Emissions from illegal agro-conversion are globally significant.

Emissions from illegal agro-conversion account for 42% of all emissions from tropical deforestation. The total is equivalent of more than 2.7 Gt CO2 per year between 2013-2019, a total of 19 Gt for the entire seven-year period (2013-2019). On an annual basis, that’s more than India’s emissions from fossil fuels in 2018.

Commercial agriculture–legal and illegal–is the leading cause of deforestation in the tropics.

The expansion of commercial agricultural is the leading source of greenhouse gas emissions from land use change in the tropics. A surge of voluntary corporate commitments to protect forests have struggled to gain traction. The New York Declaration on Forests pledged to halve deforestation by 2030; deforestation has actually worsened since the agreement was made in 2014.

These global estimates of illegal agro-conversion are conservative–the truth on the ground is undoubtedly worse than this. A lack of transparency is at the heart of the problem.

Most countries do not report on the extent to which forests are being cleared illegally – consider our numbers the conservative end. The authors report strictly on estimates of well-documented illegality; actual illegal behavior is probably even more widespread.

Transparency matters. A lack of data enables governments and companies to claim plausible deniability of any complicity in illegal forest clearing.

Too much of the world’s agricultural production and trade carries a high risk of including illicit harvests, leaving companies and their customers trafficking in complicit goods.

In 2019, exports of at least US$55 billion were linked to agro-conversion across ten commodities – mostly those grown in Latin America and Asia. This exposes agribusiness supply chains to risk of association with land grabs and human rights abuses. It makes consumers complicit  in tropical forest loss and trafficking in illegal products, whether they know it or not.

But we also found evidence that this problem is solvable.

Indonesia has successfully reduced its deforestation every year since a peak in 2016. Brazil was successful in drastically reducing deforestation up until 2012 – and in doing so contributed more to addressing climate change through a reduction in related emissions than any other single country. We see leadership on this issue from many companies, and are encouraged by the focus on deforestation communicated by the UK, the COP-26 host, as a central issue for this year’s climate talks.

The UK, US, and EU governments are all currently crafting trade regulations that would keep illegally produced goods from entering their markets.

“I think most U.S. consumers would strongly agree that it’s immoral, outdated, and preposterous that products sold on supermarket shelves can be traced back to illegally deforested land,” said US Representative Earl Blumenauer in a news release. “This report offers more evidence as to why we need to crack down on illegal deforestation from commercial agriculture.”

Updates to the US Lacey Act in 2008 banned the trade in illegal timber. Those new regulations are working to stop illegal logging around the world. We can use similar tactics for other illegally produced commodities.

“Putting an end to unnecessary illegal deforestation for palm oil, soy, beef, and other products is the next logical extension towards ending these destructive practices that are hurting the world’s forests and the climate,” said Rep. Blumenauer.

In the coming weeks, we’ll publish new analysis showing a pathway forward, including specific recommendations for commodity producer countries, importing countries, investors, and civil society. Sign up here for updates on this work.

Shades of REDD+
ART, JNR or GCF… Which is Best for Countries?

13 May 2021 | Last month, several donor governments and companies offered to pay countries for emission reductions measured and issued under the Architecture for REDD+ Transactions (ART).  Just the week prior, Verra issued the revised Jurisdictional and Nested REDD+ (JNR) standard, v4.0.  And last week the Green Climate Fund (GCF) held a dialogue to inform the next phase of REDD+ results-based payments under the GCF.  These three represent the available “open” carbon finance opportunities for forest countries (noting that the Forest Carbon Partnership Facility’s Carbon Fund only allowed a limited number of countries to apply and is now closed).

This may leave some forest countries perplexed over which avenue to choose—ART, JNR or the GCF? Is one of these better than the others?  Our view is simply that it depends on the country. A country may find that one option is a better fit for their context than another.  In this blog we do not opine on the stringency of the standards, nor whether companies should prefer purchasing credits from one over another.  Rather, we explain the differences and, in doing so, hope to help countries consider the options available to them.

Note:  A more detailed comparison of the three initiatives can be found here

Market or non-market finance?

One of the key differences between the GCF, compared to ART and JNR, is that the GCF is providing non-market payments for emission reductions rather than a carbon credit transaction.  While it is true that a country may use ART or JNR as a means to make a non-market payment, the GCF to date has been the best fit for countries that are looking for financial recognition for REDD+ performance, but not interested, or yet ready, to sell carbon credits.

REDD+ payments under the GCF are based on countries’ REDD+ submissions to the UNFCCC.  Such submissions are technically assessed by expert review teams and then undergo additional scrutiny by GCF technical experts.  Unlike ART and JNR, emission reduction claims are not ‘audited’ by an independent third party.  There is more flexibility under the GCF with respect to technical issues such as the stringency of data, or methods to set baselines, and therefore may also be a good fit for countries that are in early stages of developing forest monitoring systems.

The GCF may also be a good fit for countries that do not yet have clarity on carbon rights, or that by law cannot sell ‘national scale’ carbon.  Because the GCF is not a ‘market-based’ instrument, however, it does not engage the growing private sector finance interested in market-based credits.  Whether the GCF Board decides to fund another phase of results-based payments will likely be decided this year.


If the GCF is a good fit for countries that do not wish to sell carbon credits, or for countries that cannot yet meet a market standard, then what is the key difference between ART and JNR?  Both purport to be ‘market-based’ standards.  However, they were developed with different objectives in mind: ART was created to incentivize government policy change, while JNR’s main goal is to promote credibility when accounting for emission reductions at various scales.

There are actually more similarities between these two standards than differences.  Both have prescriptive requirements for measuring and monitoring greenhouse gases.  They both use a pooled buffer to manage reversals and require leakage discounts.  The specific provisions around these may differ – and therefore countries will want to look closely at each standard – but the broad outlines are similar.

One major difference, however, is that ART may offer the opportunity to generate jurisdictional credits for reforestation.  It may also offer a more flexible baseline for “high forest cover, low deforesration” countries.  ART’s standard, called TREES, is currently underoing public review for changes that would enable these new provisions.  By contrast, the current version of JNR only allows crediting for emissions from deforesration and forest degradation and does not have special provisions for countries with low deforestation rates—although Verra has stated that future changes to JNR may provide such flexibility.

Another major difference between ART and JNR is that JNR provides provisions for “nesting” projects into a jurisdictional program.  Where a country aims to catayze up-front, private sector finance for investments into operational activities, nesting supports this goal by carving out site-specific areas for such finance to flow.  Nesting may also be useful where land tenure and carbon rights are diffuse and respecting such rights is challenging with an “only jurisdictional crediting” program.

JNR’s provisions are more prescribed with regard to transparency in benefit-sharing mechanisms and protecting the rights of non-state actors (indigenous peoples, local communities, landowners, or anyone that may have a claim to the carbon in forests). By contrast, ART is more specific than JNR on safeguards—although if a country combined JNR with an additional safeguards-focused certification, such as the REDD+ Social & Environmental Standards, the certification would compare well to ART.

ART is set up to drive countries towards mitigation efforts at a national scale, while JNR seems comfortable with project-based approaches and medium-scale jurisdictional programmes. For TREES, subnational programmes have to be very large (in excess of 2.5 million hectares of forests) and such programmes can only receive credit up to 2030—after which time they must transition to national scale crediting.  JNR is more flexible and offers a “bottom up” option—allowing direct crediting at local scales—within a national framework for REDD+.

Conclusion:  It all depends…

In conclusion, countries have several options for accessing results-based REDD+ finance – and it depends on their circumstances which of the options is most advantageous to them.  For example:

  • Some countries – for political or legal reasons – may decide not to participate in market-based finance for forests. For example, Ecuador faces legal barriers to monetizing ecosystem services—so GCF finance is a good option.
  • Costa Rica has provided a concept note to ART. It has an operational payments-for-ecosystem services (PES) system that it can build on, and clarity on carbon rights.  Landowners “opt in” to participate, and share benefits from, the national system (or not), so the government is not selling carbon that it does not own.
  • Other countries that have existing projects or wish to engage up front investment finance into on-the-ground, local activities may be interested in pursuing JNR. JNR has multiple “nesting” scenarios that enable countries to incentivize the private sector, through crediting both the government and carbon projects in parallel.

Multiple standards may be confusing at first, but ultimately is a positive development—offering different pathways to encourage mitigation for the many different circumstances of forest countries.

Changes to Verra’s Jurisdictional and Nested REDD+ Framework to Advance Global Climate Goals

07 May 2021 | This framework leverages the strengths of both scales of implementation. Governments create enabling environments and the right incentives for forest protection. REDD+ projects tend to be more nimble and effective at delivering services to local actors, including communities, and addressing local drivers of deforestation.

Jurisdictional and project-based REDD+ efforts are also likely to tap into different pools of capital. Jurisdictional REDD+ efforts are more likely to be of interest to buyer/donor governments given the larger scale of reductions that can be achieved. And while some corporates may be interested in that scale, REDD+ projects are more likely to appeal to the private sector who will want to have a clear story to tell (e.g., “we helped protect this forest and these species”) and may prefer having a specific counterparty.

What Is Different?

To strengthen the rules for this integration of project-based REDD+ with jurisdictional efforts, several updates were made, most notably:  

  • Updates to ensure high-integrity accounting of emission reductions at the jurisdictional level that reflect the latest science and best practice;
  • Project baselines will be set on the basis of jurisdiction-wide Forest Reference Emission Levels (FRELs) and risk of deforestation and/or forest degradation; 
  • These FRELs will need to be updated more frequently, from the current 5-10 year timeframe down to a 4-6 year interval. Additionally, the FREL historical reference period was shortened from 8-12 to 4-6 years. 

Different Ways of Accounting

These updates are made with the primary goal of driving high-quality greenhouse gas emission reductions at multiple scales and ensuring that the accounting of emission reductions at the project level is aligned and harmonized with government accounting. This does not mean that the old project-based approach was invalid. All existing projects followed the requirements and the accounting methodologies that were in place when they were registered, and which were developed taking into account best practice, lessons learned, the latest scientific findings at the time, and extensive stakeholder input. Given those projects followed the Verified Carbon Standard (VCS) program requirements and the respective accounting methodologies, including having the project design validated and the results verified by independent auditors, their emission reductions are real and permanent.

The new approach to setting baselines (based on Forest Reference Emission Levels, FRELs and risk of deforestation and/or forest degradation) is a different way of doing this, but does not mean that the previous approach was inaccurate. Indeed, many experts suggest that jurisdictional accounting by itself may not adequately reflect  the level of threat faced by particular patches of forest. In addition, it is important to note that, before the emergence of FRELs, projects had to establish baselines without the benefit of jurisdiction-wide data. Now that many countries have established FRELs, they can be used as the basis for accounting across the entire jurisdiction, including to help establish project baselines that are fully aligned with government-led accounting and the risk of deforestation and/or forest degradation. Together, this will allow high-integrity approaches across multiple scales that both facilitates accounting and helps ensure finance can flow to where it is most needed — from national to project levels.  

This change is analogous to some of the technological developments that we have seen in audio. As a result of progress in this area, we now have technologies like mp3 files and satellite radio. However, vinyl records still exist and produce excellent sound quality, even though they may not be as simple to store and are not as readily shared as electronic formats. But just because most of us rely on electronic formats for listening to music, this does not discount the value of vinyl. At the end of the day, both electronic formats and vinyl records produce music, and both previous and current approaches to setting REDD+ project baselines generate real and permanent emission reductions. 

REDD+ has demonstrated that finance can be effectively channeled to long-term forest conservation by helping local communities thrive without having to destroy the surrounding forest. The task at hand is now to make sure that the lessons learned over the last decade are incorporated into evolving frameworks behind REDD+, and that means integrating projects and emerging government efforts so that we can leverage as much finance as possible to protect the world’s remaining forests.

Who’s Buying Carbon Offsets?
Latest EM Insights Explores the Demand Side

05 May 2021 | Carbon markets are booming. What will the demand for voluntary offsets look like if it is estimated that the market needs to grow 15-fold by 2030 and 100-fold by 2050 in order to meet Paris Agreement ambition? The third and final installment of Ecosystem Marketplace’s 2020 State of the Voluntary Carbon Markets report, published yesterday, explores some of the most significant trends and developments from the demand side.

In 2020, the EM Global Carbon Survey received responses from its global network of EM Respondents, consisting of 152 project developers, investors, retailers, and brokers that provided carbon market transactions across 73 countries, 20 standards, 41 project types, and 21 buyers sectors. The report’s findings highlight some notable similarities and disparities between European and North American buyers, showing that in 2019:

  • European buyers are gaining market share as they are purchased more offsets than other regions, increasing 48% in 2016 to 63% in 2019.
  • Compared to Europe, a greater but declining portion of public sector and non-profit buyers are present in North America.
  • In both regions, the Finance/Insurance sector bought relatively high volumes of carbon credits.
  • Likely for reasons of supply, Europe was more likely to purchase international credits while North America tended to go domestic.
  • While buyer preferences vary region to region for specific standards and project types, projects with carbon and non-carbon benefits consistently attracted premium prices.

Download the report for free now to read more on the EM Global Carbon Hub.

6 Words to Describe the US Pledge to Reduce Emissions 50-52% by 2030

This story first appeared on the WRI blog. Cover Image by: The White House

The first 100 days of U.S. President Biden’s administration saw a flurry of new action and commitments on climate. He quickly rejoined the Paris Agreementactivated agencies across the federal government to be part of the climate change solution, and proposed a once-in-a-generation $2 trillion investment in infrastructure and jobs for the clean energy economy.

The latest milestone is a new national climate commitment under the Paris Agreement (known as a Nationally Determined Contribution, or NDC), pledging to reduce U.S. greenhouse gas emissions by 50-52% from 2005 levels by 2030. This commitment is significantly higher than the previous U.S. pledge to cut emissions 26-28% by 2025.

Biden announced the new target at the outset of the Leaders Summit on Climate, organized by the United States on Earth Day, April 22, 2021. The Leaders Summit was an opportunity to revive global cooperation on climate and featured world leaders, business executives, and climate and environmental champions.

This new target comes against a backdrop of mixed progress on climate since President Obama announced the first U.S. emissions-reduction commitment in 2014. The Trump administration spent four years rolling back and weakening important climate and pollution regulations. The past five years have seen some of the most damaging floods, hurricanes, droughts and wildfires in U.S. history. And global emissions continue trending upward, rising at least 4% since 2014. However, despite President Trump’s efforts, U.S. emissions declined 2% from 2015 to 2019, in part because of an unprecedented groundswell of climate action by U.S. states, cities, businesses and others, as well as organizing by youth activists, that helped to raise ambition at a time when federal leadership was absent.

All of this culminated in Biden setting a target to cut emissions in half by the end of this decade — a goal that is not only achievable, but will create numerous economic and health benefits and millions of good-paying jobs.

Here are six words to describe this historic announcement:

1. Ambitious

U.S. Secretary of State Antony Blinken said at the Leaders Summit that this administration is committed to do more to address the climate crisis than any previous administration. The new target of 50-52% below 2005 levels by 2030 increases the average annual pace of reductions by 30% from the 2025 target set by President Obama, and doubles the pace from the earlier target set under the Copenhagen Accord of a 17% reduction by 2020. This pace exceeds the average annual rate needed to reach net-zero emissions economy-wide by 2050, something Biden called for in an executive order in January.

Achieving the new commitment will require bold steps across all sectors of the economy — each necessary to both near-term and mid-century goals. President Biden has targeted 100% carbon-free electricity by 2035. He plans to set vehicle emissions standards and find ways to reduce emissions from international shipping and aviation. He proposes large building retrofits and new energy codes to ensure all buildings are highly efficient and electrified. He promises to support electrification, efficiency, carbon capture and hydrogen use in industry. And he commits to invest in forest restoration and climate-smart agriculture, phase down the use of hydrofluorocarbons (HFCs), and reduce methane emissions from oil and gas, agriculture and waste. It is truly a “whole-of-economy” approach.

2. Achievable

Analysis by WRIalong with many others, shows that there are many pathways to cut emissions by 50% below 2005 levels by 2030, and that doing so will create millions of good jobs, make our economy more competitive, and reduce death and disease from air pollution.

Research shows that the country can take advantage of trends already underway to phase out uneconomical coal-fired power plants, triple the rate at which we are building wind and solar farms, and increase the electric vehicles (EV) market from 2% of sales to more than 50%, all by the end of this decade. With the falling costs of EV technology and the opportunity for the United States to lead on EV battery manufacturing, the economic benefits of clean cars are quickly outpacing their upfront costs.

Infrastructure, like that proposed in Biden’s American Jobs Plan, is key to support the growing clean energy economy. That means modernizing the grid to allow for more cheap wind and solar. It also means deploying ubiquitous EV charging stations, to allow individuals, businesses and cities to electrify their vehicles.

The Biden administration also has several regulatory tools at its disposal to tackle emissions. Environmental Protection Agency (EPA) Administrator Michael Regan said the agency is advancing regulations to limit carbon emissions from power plants and vehicles, the two largest sources of U.S. emissions. The administration also plans to advance more aggressive methane standards on oil and gas operations, which contribute a significant amount of fugitive emissions.

This would build upon major energy legislation Congress passed in December 2020 to phase down HFCs, super-pollutants used in refrigeration and air conditioning; expand investments in wind, solar, the electricity grid, energy storage and weatherization of low-income housing; and increase energy efficiency upgrades of schools and federal buildings.

Biden’s whole-of-government approach will be complemented by a whole-of-America approach through U.S. state, local and private sector action and partnerships. The 2019 Accelerating America’s Pledge analysis found that ambitious action from states and local actors could reduce U.S. emissions 37% below 2005 by 2030. An “All-in” strategy that pairs local climate action with aggressive federal engagement could achieve the 50% reduction goal by 2030.

3. Affordable

Not only is the low-carbon, clean energy transition affordable, it is an immense opportunity for the U.S. economy. A recent WRI report found that 41 U.S. states are already growing their economies while reducing their emissions. A major motivation is the creation of good jobs.

Investing in wind and solar creates twice as many jobs as the same investment in fossil fuel production, and restoring degraded lands can be a major source of employment. Plus, the mean hourly wages for clean energy jobs are 8-19% higher than the national averageWidespread electrification of the economy could support up to 25 million good-paying jobs over the next 15 years and 5 million sustained jobs by mid-century — all while saving households an average of $2,000 annually in energy costs and better health outcomes.

Clean energy and infrastructure investments are also key economic recovery tools post-pandemic. WRI’s COVID-19 Recovery Expert Note series demonstrate how targeted investments can generate a large number of jobs in electric busespublic transitenergy-efficient buildingsgrid infrastructure, and conservation and restoration of natural and working lands. A recent analysis from Moody’s found that the American Jobs Plan would create more than 2 million additional jobs by the mid-2020s than would otherwise exist. These jobs will reach all types of communities. WRI analysis finds that jobs in clean energy outnumber fossil fuel jobs in four out of five rural U.S. counties. Climate action is also good for business, as understood by the more than 400 major U.S. companies that called on President Biden to cut emissions by at least half by 2030.

Lastly, it is also essential that the policies and investments are designed to address underlying racial and social justice issues and help build wealth within disadvantaged and marginalized communities. Biden’s American Jobs Plan commits to ensuring that at least 40% of the benefits from its clean energy investments will accrue to these communities.

4. Necessary

The strongest rationale for action is the consequence of inaction.

2020 set a new record of 22 climate and weather disasters in the United States that each cost over $1 billion, for a total economic toll of more than $95 billion. Without new policies, the annual economic damages from climate change could reach 1-3% of U.S. GDP by the end of the century; up to 10% in the worst-case scenario. Extreme heat, sea level rise and crop yield declines will hit the South and parts of the Midwest the hardest.

This is why the Intergovernmental Panel on Climate Change (IPCC) warned that the world faces dire impacts unless all nations take unprecedented action to keep global warming below 1.5 degrees C (2.7 degrees F) above pre-industrial levels by cutting emissions in half by 2030 and reach net-zero around mid-century. Investments in resilience, in addition to mitigation, are necessary to protect communities from further harm.

Human health is also compromised by our current energy system. Poor air quality is the leading environmental risk to people, particularly those living in urban areas, and responsible for more than 7 million premature deaths annually worldwide. Most of this is driven by power plants, vehicles, and industry burning fossil fuels and generating air pollution like ozone, smog, particulate matter and greenhouse gases. Additionally, human health impacts are not felt equally. It is a burden borne most by low-income communities and communities of color. One study found that white populations in the United States experienced 17% less air pollution than was caused by producing the goods and services they consumed, while Black and Hispanic communities experienced 56% and 63% more pollution, respectively. It is a dire matter of equity and justice to address the dual crises of climate and environmental pollution.

5. Foundational

This new target is one component of a comprehensive national climate policy consistent with the Paris Agreement. To raise the feasibility and credibility of the U.S. NDC, it needs a more detailed action plan, along with further commitments to the international community.

President Biden announced that his National Climate Task Force is developing a national climate strategy to be issued later this year. Obama released his Climate Action Plan just before the 2014 target. To achieve this new target, the strategy must involve steps to rapidly deploy proven clean energy technology we have today, lower the cost for emerging technology, and phase in standards to eliminate greenhouse gas emissions and other pollution.

While the Biden administration has several tools at its disposal, it is also imperative that Congress opens more avenues to achieve a 50% reduction. In addition to historic investments in domestic infrastructure and manufacturing, Congress could codify a national Clean Energy Standard — analogous to the renewable portfolio standards (RPS) that many states already have — to ensure all electricity is generated without emissions by 2035.  Another effective tool is to price or tax carbon pollution, which would help lower emissions quickly in the power sector and, if applied economy-wide, help decarbonize the most challenging sectors, such as industry. There are positive signs from Congress with the recent introduction of the CLEAN Future Act and the Clean Energy for America Act.

The United States is the world’s second-largest emitter — responsible for 13% of global emissions — and largest historical cumulative emitter. To foster international climate diplomacy, it must use its position of leadership to encourage greater ambition by peer nations. The new NDC is helping persuade other countries to step up their emissions-reduction goals and match or exceed new commitments from China, Japan, the United Kingdom, South Korea, Canada, India, South Africa and other major emitters.

To fully re-establish itself as a global leader, the United States also needs to complement its emissions-reduction target with a significant increase in financial support for developing countries — particularly to pursue clean energy, reduce deforestation, and build resilience to climate impacts. Biden’s recent FY22 budget request and the International Climate Finance Plan he launched at the Leaders Summit on Climate starts to ramp up finance, but the U.S. will need to do more to meet the urgent support needs of vulnerable countries and position the country as a leader among developed country donors. For example, the $1.2 billion Biden requested for the Green Climate Fund does not even deliver on the $2 billion pledge made by the Obama-Biden administration, let alone match the level of effort other developed countries have shown by doubling their commitments.

Coupled with the newly announced ambitious emissions-reduction commitment, more climate finance can further global ambition at the COP26 climate summit in Glasgow in November 2021.

6. Inspirational

After a four-year absence of federal leadership on climate, both domestically and internationally, Biden’s Earth Day announcement sets a renewed tone for global cooperation and concerted action to address this shared crisis. Yet achieving this national target and putting the world on track to a clean, safe and prosperous future requires more than just words. It demands sustained effort every day from now through COP26, over the next four years, and every year through 2050. The Biden-Harris administration is poised to do that, understanding that the world cannot achieve its aspirations without the United States, and the United States cannot achieve its goals without the rest of the world.

Claims + Credibility: Embracing Diversification to Scale Carbon Markets

26 April 2021 | The next decade matters hugely in our collective battle to cut greenhouse gas emissions. Existing nationally determined contributions (NDCs) by governments are collectively far from the level of abatement needed to avert dangerous warming. A 1.5C-consistent pathway requires a 45% cut in global emissions by 2030 from 2010 levels; a 2C pathway requires a 25% cut. However, total greenhouse gas emissions in new or updated NDCs published last year offered a mere 0.5% reduction.

Greater ambition is needed from governments to fill this gap, coupled with clear plans to implement NDCs. Last week’s announcements of the NDC of the US and other countries marks a big step in the right direction. As a next step, announcements need to be translated into action. A robust voluntary carbon market plays an important role in this context: It can mobilize significant amounts of finance, harness private capacity, and empower communities to benefit from mitigation actions.

Considering the important role that the voluntary carbon market can play in support of the Paris climate goals, it is in nobody’s interest for the market to be held back by disagreement over core questions, in particular related to the nature and use of offsets and the role of corresponding adjustments.

We, the authors, have been on different sides of this debate. This is not because we disagree on the value or need for a credible and transparent voluntary market. It is instead, largely, a different view on the best way forward for the voluntary carbon market in light of two objectives: First, to ensure the credibility of claims made by buyers. When a company claims to have ‘offset’ its emissions, that statement should be grounded in truth. Second, to use the voluntary carbon market to maximize investment in mitigation action. In this way, it can be an important tool to make good on the commitment to support developing countries’ climate action.

Both objectives are clearly valid. In the light of insufficient levels of public climate finance, carbon markets are essential tools to drive emission reductions and other environmental and social development benefits, in particular in developing countries. Carbon finance can also play an important role in harnessing private-sector ingenuity and implementation power to devise climate solutions on the ground. At the same time, the use of carbon credits needs to be transparent and corporate claims made against these credits must be true.

On this issue, as with others, companies rightly want clear guidance to inform their investments and consequent claims. They also want confidence that these won’t expose them to criticism or become effectively stranded further down the line. In the interest of providing this clarity, we have identified three important principles on which we agree:

First, avoiding all forms of double counting is critical to the integrity of carbon markets. This has always been the case and is indeed enshrined in the Paris Agreement. The logic of the Paris Agreement, i.e., building trust through transparency and encouraging a ratcheting up of ambition and action, depends on robust accounting for emission reductions and removals. Double counting risks compromising the environmental integrity of the climate regime by distorting actual greenhouse emissions achieved by countries. If left unchecked, double counting of emissions reductions may stifle efforts among countries to cooperate in the implementation of the Paris Agreement.

Second, companies can credibly use voluntary carbon markets within the context of ambitious climate plans without claiming to offset their emissions. The predominant narrative to date has focused on how the two objectives of credible claims and maximized mitigation investment should be reflected in a future approach to ‘offsetting’. What has too often been overlooked is the fact that both can be met without compromise through a different approach to the market: one that emphasizes the financing of climate action rather than the offsetting of emissions.

This is an approach that is garnering increasing interest, most recently through a study by New Zealand-based Motu Research. Companies could still use existing market infrastructure and take credit for supporting emission reductions beyond their own operations and supply chains. But rather than offsetting company emissions, their transactions would contribute to host country NDCs, and indeed sustainable development goals, for which they could make a “finance” or “mitigation” claim. The integrity of the unit would still be assured through standard requirements; but with no offset claim, a corresponding adjustment would not be required.

By taking up such finance- or mitigation-based claims, the voluntary market could access more mitigation opportunities than if restricted to offsetting. It could actively contribute to the Paris Agreement’s goals by supporting the achievement of NDCs, helping to raise their ambition, as well as acting beyond them.

This approach could also enable investment in activities that are not suited to offsetting claims, and explore new approaches to attributes such as permanence, where the complexity of current approaches is primarily in place to protect the offset claim. This shift could also open up new modes of voluntary corporate action such as those described in WWF’s Blueprint for Corporate Action on Climate and Nature.

In other words, finance-based claims could create a pioneering new route for private actors to make a transformative and high-impact contribution to the Paris goals while making claims that can be trusted.

Third, offset claims should be robust, and companies should avoid ‘double claiming’, i.e., more than one entity using an emission reduction or removal towards a target. For example, if a government is accounting for emissions reductions under its NDC, a company should not use the same emission reductions certified, e.g., under the Gold Standard, as an offset. While such double claiming would not affect greenhouse gas accounting under the Paris Agreement, when both a government and a company take credit for the same emission reduction, doubt is cast on any compensation -or offset- claim by the company. Corresponding adjustments give companies the assurance that there is no competing claim hanging over the emission reduction it has enabled or purchased.

The potential for perverse impacts through double claiming may be higher in some country contexts than others. NDCs under the Paris Agreement are not uniform: some are economy-wide, some sector-specific; some are conditional, some unconditional; and some are enshrined in law while others may be largely aspirational. Very few countries have the technical capacities yet to put in place the required accounting systems for corresponding adjustments, and those countries that need carbon investments most may have the least capacity.

This points to a need for pragmatism in how new rules are introduced. But it does not change the fact that if an emission reduction is double claimed, its credibility as an offset is in question. Companies that are serious about their pledges should care about this: they’re making a promise to their investors and customers when they claim to have offset their emissions and should want this promise to be kept.

In sum, we need solutions that can enable the voluntary market to continue to deliver impact on the ground over the next decade and beyond, moving beyond the Kyoto era and supporting the Paris goals. Offsetting has taken the market a long way and will continue to play an important role. If market actors are willing to embrace new claims – those that emphasize the financing of an emission reduction for climate mitigation – we could go a lot further and, in so doing, put the corresponding adjustment debate behind us.

Photo by Rodolfo Clix from Pexels

Shades of REDD+
Creating a Bigger Tent for REDD+ Success

Natural resource management is, by nature, a collective action problem that requires incentives and cooperation of all levels of government, private and public actors. National governments alone are not better equipped to cope with deforestation compared to broad coalitions of stakeholders.

22 April 2021 | In 2009, Elinor Ostrom became the first woman and political scientist to win the Nobel Prize in Economics. She was awarded the prize “for her analysis of the economic governance, especially the commons.” Ostrom has based her work on empirical observation, which brings a timeless quality to her work — something that grand theories often lack. Her publications continue to inspire me and hold lessons worth sharing with others that look for ways to successfully reduce deforestation and address climate change.

Ostrom offers more optimism about human nature than most of her colleagues. Her starting point is not to assume that people are rational—always calculating to optimize their benefits—but to observe how communities manage common resources – grazing lands, fish stocks, forests. She studied irrigation systems in Nepal, pastoralists in Mongolia, and forest management systems in Bolivia and Bangladesh, carefully analyzing human-environment interactions and identifying conditions in which communities successfully and sustainably manage resources, including cases where central government controls are weak or absent.

Guidance on how to manage resources sustainably is needed today more than ever. Tropical deforestation increased 12 percent between 2019 and 2020, despite a decade and a half of intense debate on how to create incentives to reduce deforestation and degradation (REDD+) and numerous initiatives to protect tropical forests. Maybe it is time to revisit some of Ostrom’s findings and see what they offer for REDD+ implementation.

Tropical deforestation as a collective action problem

Tropical deforestation, like climate change, is a problem that is caused by a multitude of agents and countless local governance failures, and misplaced incentives. It is driven by a global hunger for commodities, as well as a lack of institutions and state presence in many tropical forest regions which compounds the challenge of poverty and an absence of development alternatives.

The mix of global and local drivers of deforestation makes deforestation a classic collective action problem. No country or group of actors can address deforestation alone. Local benefits of forest conservation — such as providing food, fodder, and other livelihoods needs for indigenous peoples and forest-dependent rural communities — are less attractive to governments than the immediate returns that may come from deforesting such lands. And the global benefit, such as protecting terrestrial carbon stores and ecosystems, shows no short-term, or local returns, at all.

Are we expecting too much of national governments?

It is this absence of local and national returns that REDD+ sought to address. REDD+ was conceived as a global compact under which richer nations would support tropical forests through results-based or market-linked payments for reducing deforestation. While pledged funds from developed to developing countries continue to fall short of what is needed, several countries and companies just announced a new public-private finance initiative, the Lowering Emissions by Accelerating Forest finance (LEAF) Coalition that aims to mobilize at least US$1 billion to protect tropical forests through jurisdictional REDD+. With more funds available, national governments reacting to the incentive of future market payments may increase efforts to halt deforestation.

However, while governments have the regulatory powers to adopt policy, they alone may not be able to make the difference and significantly reduce deforestation in the required time frames. REDD+, if considered a purely national incentive mechanism, overburdens national governments with the responsibility to solve the problem of deforestation in their territories. National policies are, no doubt, essential to improve forest governance and establish the regulatory context for conservation. However, incentives to deforest do not magically disappear once a policy to protect forests has been adopted by a government. Governmental policies rely to a great extent on the ability and willingness of affected people and communities to cooperate, implement and comply with a policy. This is particularly true in countries that have limited national and local authority. If people see a benefit in complying with a policy, the costs of enforcement are much lower than in cases where they seek to evade the policy. It is therefore essential that not only governments deal with an externality – such as climate change or deforestation – but that local communities, farmers, and private enterprises are enlisted and feel empowered to contribute to addressing the problem.

The assumption that governments are the sole agents to solve large collective action problems tends to remove authority from local institutions and people to tackle local problems. At the same time, it overwhelms national governments that are distant from the problem they are seeking to solve. Capitals are often hundreds of miles from the forest frontier, and government officials have limited control over places where a mix of lawlessness, weak governance, and hunger for land eats into tropical forests. Uniform policies that are insufficiently adapted to diverse local circumstances often fail to impress local actors. As Ostrom emphasizes, one important lesson from empirical research is that recommending a single governance unit – such as a national government – to solve a collective action problem needs to be seriously rethought.

Any measure has to build local ownership and involve local actors

This holds important lessons for REDD+: successful efforts empower local actors and build on existing social capital and leadership. Involving local institutions – such as park services or local environmental bureaus – from the start, including in the design of projects, programs and policies are essential. Trust means to work with known actors that have a history of honoring agreements. This also means that local groups have to be included in the incentive framework, including the monitoring of success.

There are various ways to do so. A government agency may engage local actors through, for example, a payment-for-ecosystem services (PES) program. An example of a successful PES program is Ecuador’s Socio Bosque system, which offers payments to owners of land with native forests to guarantee its protection over the medium to long-term; to date, conservation agreements have been signed that cover 630,000 hectares. Banks and investors may offer green credit lines to farmers that commit to protecting forests. For example, the boutique investment firm Sustainable Investment Management Ltd offers credits to farmers in the Brazilian Cerrado that commit to environmental, zero-deforestation, and labor standards. Well-designed REDD+ projects can also play a role in halting deforestation through sponsoring community development programs, such as introducing agroforestry systems, increasing employment linked to sustainable forest management, and putting in place capacity building and training programs. The greater the understanding of conditions on the ground, the greater the likelihood that efforts to reduce deforestation will succeed. This includes respecting local land and forest rights, strengthening local institutions, such as park services, and cooperating with community organizations and trusted non-governmental organizations with a local presence.

Enlisting all levels of governance to support conservation

As important as local solutions are, they will not be sufficient. Local institutions may be best able to diagnose the problem and enlist those actors that are essential to conserving forests. Deforestation is directly or indirectly driven by population pressures, changing consumer preferences, and international commodity markets and the globalization of commodity trade means that distant markets put pressure on tropical ecosystems, in particular where markets are integrated. This means REDD+ can only be successful if all levels of policy – international, national, regional, and local – and all types of actors – government, private, community, and individuals – contribute to the solution.

Recognizing these problems, Ostrom, later in her career, started to apply her understanding of local management of resources to global collective action problems, such as climate change. She saw global challenges as the cumulative result of actions taken by individuals, families, small groups, private firms, and local, regional, and national governments. Consequently, she posited that these problems can only be addressed through multilayered solutions and involve all levels of governance: international frameworks, national governments, local public and private institutions.

Governments are on the hook to implement government policies, strengthen forest governance and align financial flows with the Paris Agreement. International partners have to support tropical forest countries through results-based payments -such as LEAF- but also with upfront finance to enable the adoption of policies and putting in place local conservation incentives. Demand-side actors have to put in place safeguards to reduce the imported deforestation, send price signals that support sustainability, and support local agricultural extension. Investors should support deforestation-free agriculture and forest, and invest in PES and REDD+ projects and programs. Local actors should be empowered to define and implement conservation measures.

Multi-layered (or polycentric) approaches require experimentation at multiple levels and learning through a multitude of initiatives. They have the added advantage that failure at one level or by one set of actors does not lead to the collapse of the system. In the case of deforestation, the lack of performance by one actor – be it a government or a company, a local institution or an international donor – or initiative should be absorbed by the multitude of other actors and initiatives. Testing multiple approaches also allows comparing success, which leads to learning and a refined set of actions.

In sum, Ostrom’s writing remains highly policy-relevant. She reminds us to ensure that the right actors are involved in defining solutions to collective-action problems. This means that national governments, while never to be left off the hook, are not alone equipped to cope with collective action problems that have large-scale outcomes. Devising successful approaches to complex environmental problems is a grand challenge and reliance on one scale to solve such problems is naïve. Stopping deforestation is a challenge that requires a “big tent”, not a government-only solution.

Photo: By © Holger Motzkau 2010, Wikipedia/Wikimedia Commons (cc-by-sa-3.0), CC BY-SA 3.0, https://commons.wikimedia.org/w/index.php?curid=10997825

Forestry Leads the Charge to Close a Gap in Carbon Offsets Retirements and Issuances

16 April 2021 | Are we at the turning point where demand for carbon offsets will outpace supply? A new Ecosystem Marketplace Insights Brief reviews carbon offsets supply and demand signals.

The report, Closing the Carbon Offsets Issuances & Retirements Gap, State of the Carbon Offsets Standards’ Issuances & Retirements, 2021 Quarter 1 features aggregated data derived from standards’ registries, including Verra’s Verified Carbon Standard (VCS), Gold Standard, American Carbon Registry, and Climate Action Reserve, Plan Vivo, and the California Air Resources Board to bring you the latest updates and historical roundup of independent and compliance offsets standards.

As more and more companies make new net zero commitments, we are watching also how companies that had already made such ambitious goals over the past couple of years are designing their game plans for achieving them. If carbon offsets are a part of those strategies, what types of projects, which standards, project locations, among other additional attributes, will these corporate buyers prefer? More to be seen as organizations worldwide respond to the 2021 EM Global Carbon Survey, but for now we can begin to see that so far in the first quarter alone that 2021 has already proven to be a landmark year in carbon markets.

Our findings show compelling shifts, such as:

  • Retirements surpassed issuances in January 2021 for the first time since 2017. The increase was primarily driven by forestry project retirements.
  • VCS retirements have more than doubled, Plan Vivo nearly doubled, and Gold Standard increased by 40% compared to Q1 2020.
  • Over two-thirds of the world’s issuances in Q1 2021 were located in the United States, India, Turkey, Cambodia, and China.

Download the report for free now to read more on the EM Global Carbon Hub.

Shades of REDD+
The Risk of Diverting Carbon Finance from Nature to Technological Carbon Removals

9 April 2021  |  Meeting the goals of the Paris Agreement requires the deployment of carbon removal technologies at scale. The generation of ‘negative emissions’ can rely on natural processes, such as forestation or soil carbon sequestration, or human-engineered technologies, such as carbon capture and storage from combusting of fast-growing bioenergy plantation (BECCS), enhanced weathering, mineral carbonation, or the direct capture of ambient carbon dioxide (DACC). While there are differences in their mitigation potentials, risks and maturity, these are all viable options to remove carbon dioxide from the atmosphere and store it in biomass, soils, oceans, or geological formations in the long term.

Additional carbon removal depends on support and subsidies, and carbon finance has been proposed as a mechanism to drive investments in negative emissions. Increasingly, engineered carbon removal technologies are pitched against nature-based solutions and forests, and some see technology as the preferred solution. Corporates with science-based targets may be expected to neutralize residual greenhouse gas emissions with carbon removals that are permanent at a timescale of several hundred years and more, and think tanks such as the New Climate Institute support carbon finance for geoengineered negative emission technologies while dismissing nature-based solutions as suitable for carbon markets.

Any effort to reduce carbon concentrations in the air is welcome. However, a tech-driven plan that establishes a clear preference for carbon finance to go towards engineered solutions at the expense of nature-based carbon removals is misguided and potentially dangerous.

Technologically Stored CO2: Superior Carbon Credits?

Carbon markets are increasingly proposed as a mechanism to subsidize technological carbon removal solutions. Bill Gates – a fierce believer in DACC – compensates his personal emissions at $600/ton of carbon dioxide captured by an Icelandic DACC start-up (as a bulk investor he gets a discount to the $1,200 offered to subscribers on the startup’s website). But the support for engineered solutions extends beyond tech entrepreneurs.

Experts and NGOs that are skeptical of forest carbon markets are discovering that they are more apt to support carbon offsets from engineered carbon removal solutions. They favor technology over nature because they believe technological solutions have methodological certainty and are permanent, additional, and with limited leakage risks. For many economists and engineers, technological solutions seem more manageable compared to natural solutions and, due to their high costs and single purpose of pursuing carbon removals, are unquestionably additional.

Technological solutions also are tempting as they do not require any engagement with complicated ecosystems or support from local communities. However, technological carbon removals also come with their own set of problems. BECCS, if deployed at scale, potentially requires enormous amounts of land and yield limited to no social or environmental benefits beyond storing carbon. DACC still requires large amounts of electricity, causes air pollution, and the enormous amounts of materials and energy needed may make it difficult to meet expectations of sucking gigatons of carbon dioxide out of the air. And capturing carbon – if used to enhance oil recovery or converted into carbon-based fuels, may only delay the decarbonization of our economies and a transition to a net-zero future.

Unlike nature-based approaches, technological solutions remain unproven at scale. But more importantly, engineered solutions contribute little towards a transition to sustainable societies. In fact, the promise of a future technological fix risks locking in current unsustainable economic systems.

The Permanence of Nature and Technology

While individual trees may be lost, the world has maintained forests for millions of years. If biological carbon storage is correctly incentivized, the world can – and according to the Intergovernmental Panel on Climate Change must – maintain and expand the biological storage potential from nature permanently in order to avoid further local and global climate havoc.

But there is no doubt: Natural systems are vulnerable, and the nexus of human-natural interaction is complex. Carbon stored in forests, coastal ecosystems, or agroecological systems, is vulnerable to reversals in that it can be released due to human-driven deforestation and/or natural disturbances (i.e., fire, floods, pests, diseases, landslides). And even climate change will further heighten the risk of carbon removals. For example, where regions become hotter and drier, forests may become more vulnerable to disturbance and change. This means that offsetting fossil fuels with carbon stored in ecosystems can be, indeed, risky.

However, excluding biological carbon from carbon markets fails to recognize the well-tested methods that credibly address permanence and leakage risks with sufficient certainty. Carbon market standards have formulated and refined permanence rules that assess risks and require mandatory participation in insurance mechanisms—most commonly in the form of buffer accounts. Such mechanisms transfer the permanence risk from one project to a large pool of projects. Projects contribute a share of their carbon credits to a buffer pool and, should reversals occur, an equivalent number of credits are canceled to secure the permanence of issued carbon credits. Buffer accounts do not protect the forests, but they safeguard the environmental credibility of carbon credits. For example, the massive forest fires in Brazil in 2019 and their impact on carbon projects only required the cancelation of a small percentage of reserve credits held in the buffer account that Verra administers for forest carbon projects.

Technology has the lure of being a controlled solution and sealing captured carbon underground may well result in long-term removals of carbon from the atmosphere. However, it is unclear how stored carbon can be monitored and, unless fully mineralized, permanent storage in geological formations is also not guaranteed and the perverse impacts caused by natural disasters are unclear. But more importantly, technological solutions should not replace, but rather they should complement, urgently needed investments in natural solutions.

Nature: Undervalued?

The restoration of natural ecosystems and natural forest restoration also remains undoubtedly additional in carbon market terms. Restoring forests depends on patient capital that accepts long-term returns which put such investment at odds with short-term investment expectations. Technology solutions, in contrast, need near-term R&D investment, but the hope is that once the technology is mature, it can be replicated and rolled out quickly and cost-effectively.

Investments in natural forest restoration are commercially unattractive. They are risky and returns are low. In developing countries where they are most urgently needed, they are also challenged by insecure land tenure and higher reversal risks. As a result, even though the carbon market for nature-based solutions is growing rapidly, the restoration of natural forests does not sufficiently benefit from the growing interest. Even though the opportunity is enormous: Enhancing carbon removals in soils, restoration of peatlands and coastal wetland can -starting today- annually remove over 6 billion tons of CO2 per year across 79 tropical countries and territories between 2030 and 2050 at a cost of less than US$100 per tCO2e – significantly less than the price tag of $600 – $1,200 for DACC.

Unlike technological solutions, the restoration of ecosystems and agroforestry can contribute to halting the loss of biodiversity, increase soil fertility and improve water quality. The world’s forests also produce the oxygen we all breathe and help regulate local and global weather patterns. Halting deforestation and restoring forests in recently deforested areas is also the best chance we have to avert a tipping point for the Amazon system. If current deforestation rates continue the Amazon system will flip before long to savannah ecosystems in eastern, southern, and central Amazonia. It is impossible to fully grasp the consequences of a land-use change at such a scale.

Nature vs Technology, or Nature & Technology?

Our lives depend on biologically stored carbon. At some point, our lives may also depend on storing carbon in geological formations to avert catastrophic climate change, but it is hard to compare the benefits of technology over nature. Technological solutions do not deliver the same co-benefits – and clearly cannot substitute for the loss of forests and ecosystems even though some argue technological solutions should replace biological ones for offsets. Setting one mitigation solution against another is dangerous, as all options to mitigate climate change need to be on the table. But holding out for technology to produce a superior solution is also dangerous – particularly if it discourages investments into nature-based solutions in general, and the restoration of natural forests in particular.

Carbon markets are not a universal solution to finance forests, however, they are a start and often the only opportunity to channel private finance into ecosystem restoration. While most of the finance for technological solutions will flow to companies in rich countries, investments in nature-based solutions can benefit poorer countries and communities. Indigenous and rural communities are the stewards of many globally critical ecosystems, and for them, investment in nature is the only option to protect and restore their forests.

At a moment of awakening for nature-based solutions, it seems dangerous to label biological removals as second-class carbon credits. Nature has a history of being left out of carbon markets and is only now starting to ramp up and achieve entry into the club of ‘investable’ carbon solutions. Nature cannot be shown out the door again and left to find ways to attract investment – we are out of time, and there may not be a “next time”.

Photo by Yogendra Singh from Pexels

How You Can Participate in this Series

This is the first in a continuing series of articles focused on REDD+. We invite you to post comments or propose your own submissions as the series evolves.

You can propose submissions by contacting the EM News Desk at info@ecosystemmarketplace.com. Please write “REDD+ Series Submission” in the subject header.

Please tick this box to let us know you’re not a bot.

You can unsubscribe at any time by clicking the link in the footer of our emails. For information about our privacy practices, please visit our website.

Opinion: Time for action that protects biodiversity, the climate and indigenous rights

The Xingu Seed Collection Network generates essential income for family farmers and indigenous communities. Photo credit: Ayrton Vignola.

This story first appeared on the Conservation Optimism blog. Photo: The Xingu Seed Collection Network is a strong community that communicates regularly through WhatsApp, sharing knowledge and advice. Photo credit: Tui Anandi (ISA).

18 February 2021 | From the beekeepers of Cameroon to the seed gatherers of Brazil, indigenous rainforest communities are invaluable to conservation. Their success highlights a crucial truth – that projects bringing a wide range of benefits are a powerful tool for protecting our planet.

Indigenous peoples are the stewards of our precious rainforests and will be key players in fighting against the climate crisis. Their skills and knowledge ultimately benefit us all: land managed by indigenous peoples has been found to harbour more biodiversity than protected areas such as parks and wildlife reserves. But communities are threatened daily by activities such as mining and logging, often denied land rights and access to essential services such as healthcare.

When the world stands with indigenous people, astonishing change is possible. In the Peruvian Amazon, legal recognition of indigenous and community forest rights has cut deforestation by up to 81%. The lesson is clear – champions of biodiversity, and those seeking to tackle climate change, must work closely with these communities. This means supporting their battle for rights and social justice and helping them to boost resilience and food security through sustainable economic opportunities.

Inspiring lessons from Brazil and Cameroon

In the Amazon, seed collection is key to reforesting degraded land. Rede de Sementes do Xingu co-ordinates more than 500 seed collectors, administrators and buyers in the Brazilian state of Mato Grosso. This network offers local people a vital income and has contributed to the reforestation of more than 6,600 hectares of degraded land in the Xingu and Araguaia Basin.

The network has been a lifeline during the coronavirus pandemic, providing health advice as well as distributing essential healthcare supplies such as hand gel and facemasks. Sadly, some seed collectors and community leaders have been killed by the virus – a new threat to people already facing enormous challenges. But even in such a difficult year, network members have managed to collect 19 tonnes of seeds from 112 different native species, generating an income exceeding 80,000 US$.

Meanwhile, slash and burn agriculture also threatens large parts of Cameroon’s rainforests. Local NGO Cameroon Gender and Environment Watch helps people in the Kilum-Ijim region become beekeepers instead – a more sustainable way of earning a living. They also encourage participants to be vigilant against forest fires that could threaten their hives. The NGO provides training, organisation and equipment to support farmers in this transition, and helps them sell their products (honey, soap and candles) at a fair price. So far, it has planted 80,000 native bee-friendly trees and trained 1,070 people. One-third of trainees are women, who have not traditionally taken up roles in beekeeping.

Organisations focused on biodiversity, climate change or indigenous rights should back initiatives such as these, recognising that such inclusive projects can bring success in all three areas. Conversely, work that does not may be fundamentally flawed.

We need system change – not crumbs of comfort

Natural climate solutions are an increasingly popular area for businesses to support with corporate social responsibility (CSR) activity, including the purchase of carbon credits or participation in the voluntary carbon market (which also draws in governments and NGOs). But even well-meaning businesses may not be delivering their intended aims, if the work supported does not take a holistic view of interlinked challenges.

Initiatives may tout an impressive carbon-saving figure, for example, but what is the long-term effect on indigenous livelihoods and local biodiversity? Many schemes don’t involve benefit-sharing with local communities. We can’t ignore the fact that corporate activity is often a driver of the very fundamental threats faced by indigenous communities every day. Those of us in the climate and conservation sectors should pressure corporate partners to deliver systemic change, not isolated benefits.

Holistic thinking is at the heart of the 2021 Ashden Award for Natural Climate Solutions. This award is seeking outstanding initiatives strengthening the resilience of indigenous and rainforest communities – recognising their crucial role in taking on the climate crisis.

The winner will receive a £20,000 grant, while all finalists are given marketing and business support, and access to Ashden’s network of funders, investors and expert partners. Ashden will also fund a powerful promotional film about the winner’s work. Entry is free and applications close on 3 March 2021!

What’s in a carbon credit?
New tools help quantify the sustainable development benefits of carbon offset projects

Photo: InfiniteEARTH

In celebration of International Women’s Day, March 08, 2021, Senior Associate Kim Myers calls attention to the invaluable role of women in our societies, and how female empowerment can be quantified as additional sustainable development benefits to carbon offset projects.

8 March 2021 | The people of Lango, Uganda pay a high price for their water, a price borne by the wives and daughters, not the fathers and sons. That’s because it’s women who must trek daily to rivers, streams, and forests, filling buckets of water and gathering wood to boil away the impurities. The women of Lango spend up to 2 hours a day providing water for their families – hours they could just as well spend earning income or studying in school.

Fortunately, there’s a solution: clean borehole technologies can deliver clean water from below ground, freeing up time for women to work, study, or relax. But the material and skills needed to build those boreholes don’t come cheap.

In 2019, Gold Standard hit upon a novel solution – if we built boreholes across the region, they reasoned, the women wouldn’t need to boil water, which means they wouldn’t need to chop trees, which means less carbon dioxide going into the atmosphere. Could we, they asked, use carbon finance to pay for the boreholes?

The answer, it turns out, is “Yes”, and the result is the Lango Safe Water Project, which reduces greenhouse gas emissions by eliminating the need to boil water and also frees up an average of two hours daily for local women.

Female empowerment is one of the many “co-benefits” associated with carbon projects. Unlike the emissions that these projects reduce or the carbon they remove, however, co-benefits were historically anecdotal, told in stories, rather than in numbers, like two hours saved.

Now, thanks to leading independent carbon offset standards like Gold Standard and Verra, carbon market actors can better quantify how much a given offset project contributes to sustainable development.

Improvements in gender equality are just one of many co-benefits that forest carbon projects provide. Others include the provision of sustainable livelihoods, the reduction of indoor pollution, and improved healthcare. While these attributes are necessary and important to quantify, they often consist of ‘fuzzier’ concepts. Take, for example, the Lango project, which significantly benefits the daily lives of local women. But by how much? And for whom? And how? Such questions can be very difficult to answer when you are talking about development impact.

Previously, carbon credit buyers were left to guess how much a given offset project contributed to the SDGs, or Sustainable Development Goals, the UN’s blueprint to a more equitable, sustainable, and prosperous future. This informal system of quantification led to a significant amount of ‘SDG-washing’ in the carbon market.

What is SDG-washing? Participants in the market coined the term to describe overstated development benefits associated with carbon offset projects.

Overestimating co-benefits is primarily the symptom of an emerging carbon market.  “It’s hard to tell the scale and an objectively compare one project to another when marketing material would just have the same SDG icon on Project A and Project B,” claims Sarah Leugers, Communications Director at Gold Standard. “[Market actors] are lacking the tools to be able to communicate and report [their impact] in a very clear and credible way.”

While these impacts may be secondary to companies’ primary goal of achieving net zero emissions, they are still worth measuring. “People are starting to really internalize the SDGs”, says Leugers. “They want to know, how are [carbon markets] really contributing [to development]?”

In fact, although they may be secondary for companies, sustainable development and climate mitigation have together been required core components of Gold Standard projects since it was first established in 2003.

The incentive for carbon credit buyers to quantify co-benefits extends beyond curiosity. Many market actors measure their SDG impact to create strong project narratives and enhance the credibility of their net-zero commitments. According to Ecosystem Marketplace’s Carbon Survey data, 62% of the tons of carbon purchased in 2019 were co-benefits certified. Thus, the demand for co-benefit quantification is strong. The main barrier to implementation, however, has been methodology.

Fortunately, there are major developments underway to bridge the resource gap. Both Verra and Gold Standard, major certification bodies in the voluntary carbon market, have designed much-needed tools for the measurement of co-benefits.

Verra’s SDG certification, SD VISta, is one flexible approach to quantifying co-benefits for both carbon offsets and other project types. Released in 2019, while not mandatory, the program encourages market actors to develop either their own methodology or monitoring metrics of co-benefit quantification. Acknowledging that project contexts and development impacts vary widely, Verra’s program enables a range of assessment options that go from internal verification by Verra, to the use of Independent Expert Evaluators for monitoring frameworks, to independent third-party certification when methodologies are developed.

The road to SD VISta certification is both flexible and rigorous. Thus far, Verra has registered one project, and 4 additional projects are in validation and verification stages.  The Rimba Raya Biodiversity Reserve Project, which meets all 17 Sustainable Development Goals successfully completed the registration and verification of monitored results under SD VISta, and “shows how projects can track progress against the SDGs in a rigorous and workable manner,” remarked Naomi Swickard, Chief Program Officer at Verra. “Many corporations who rely on carbon credits to meet ambitious climate goals value knowing that the carbon credits they purchase and retire have additional benefits beyond reducing emissions, and that they are independently certified.”

Likewise, Gold Standard launched the consultation phase for its SDG Impact Tools in early February 2021. The initial draft can be found here.

The tools build on past project experiences and industry expertise, mapping the typical indicators of sustainable development impacts and formatting them for quick, easy reference. Project owners take stock of their project’s development impact, both positive and negative, then ultimately assign those impacts to a specific SDG. While Gold Standard projects have been required to quantify and verify their SDG impacts, and have a design that enhances and promotes the goals of gender equality, social inclusion, and female empowerment, since the Gold Standard for Global Goals began in 2017, the SDG Impact Tools will make it easier than ever to measure and report these impacts, with standardized approaches and guidance.

And these are not the only development impact tools at the market’s disposal. Other certifications, such as the Climate, Community, & Biodiversity Standards and SOCIALCARBON are centered solely on co-benefits, meaning they can be applied to both carbon and non-carbon projects. Verra pioneered mechanisms to assess and certify community and biodiversity metrics via CCB starting in 2005, and in September 2020, Verra, W+ Standard, and Wonderbag of South Africa announced the application of the joint VCS/W+ Standard certification process to measure emission reductions and women’s empowerment results. Lastly, standards like Plan Vivo and the Fairtrade Climate Standard quantify co-benefits specifically for carbon projects.

As these tools are taken up by the market, the hope is that demand for co-benefits will increase and development impact will become a central aspect of carbon markets. According to Gold Standard’s Leugers, “We don’t even think about [development impacts] as co-benefits. We think about them as core benefits.”

Climate Change will be a Higher Priority in the 14th Five-Year Plan

This story first appeared on the WRI blog. Photo: Xinhua

02 March 2021 | In the “Guiding Opinion[1]on Coordinating and Strengthening the Work Related to Climate Change and Environmental Protection” (hereinafter referred to as “Guiding Opinions”) published by the Ministry of Ecology and Environment (MEE) in January, the government has addressed several important and bold suggestions on the country’s national climate change policies. Considering the upcoming Two Sessions in early March and the heated discussions for a blueprint of the 14th Five-Year Plan (FYP), the timing and the messages delivered through MEE signals tectonic shifts in policymaking to tackle climate change.

In September 2020, Chinese President Xi Jinping made a surprising speech to the UN General Assembly that China would scale up its nationally determined contribution (NDC) by adopting more vigorous climate change policies and measures to peak carbon emissions before 2030 and reach carbon neutrality before 2060 (hereinafter referred to as 30&60 Goals). This “Guiding Opinions” supports President Xi’s ambitious 2060 commitment, and set the stage for the upcoming 14th FYP, which will detail necessary actions to secure the neutrality pledge and transform the whole economy.

What’s new from “Guiding Opinions”:

  • Three Important Expressions Appeared for the First Time:

MEE, originated from the former Ministry of Urban and Rural Construction and Environmental Protection (MURCEP) in 1988 and re-organized in 2018, had been putting ecological civilization and pollution governance on its top agenda for a long time. Climate change issues, meanwhile, were beyond its major priorities. The new “Guiding Opinions,” however, made a bold change in its phrasing by putting “climate change” ahead of “environmental protection.” In the Principle and Guideline sections, the document emphasized the overall planning of combating climate change and protecting ecological system, laying out a systematic approach toward the 30&60 Goals in the following sections.

Another new expression worth noticing is “carbon reduction.” MEE highlighted the role of carbon reduction as “the nose of ox” (a typical Chinese proverb meaning crucial and key) among all source control targets. The expression indicates that carbon is a higher priority than pollutants control – a major responsibility of MEE.

“Guiding Opinions” also brings in the concept of “dual control” — advocating advanced provinces to both control the per capital intensity and cap the total emissions of carbon dioxide. This marks a drastic shift from the previous intensity control-only regulations on energy consumption to an absolute cap, incentivizing markets to decouple economic growth and GHG emission. Home to the world’s largest population, China consumes over 50% of the world’s coal and is the world’s biggest GHG emitter. As a developing country, China has long emphasized its large population and relatively short development time, arguing to prioritize efficiency only to allow more flexibility and secure economic stability for its low-carbon transition. However, combating climate change is not about the impact of a single person or an average number; instead, it is the overall emission data that really matters and determines the actual temperature increase.

Apparently, over the past two years, lobbies and policy suggestions from environmentalists and researchers have largely facilitated the government’s understanding and action plans for climate change issues in the decades ahead.

  • Action Plan across National Levels, Industries, Sectors and Mechanisms

For the world, China’s 30&60 Goals are a big step forward. It means an encouraging transition from “why” to “how” — from vision to workplan. But for many domestic provinces and industries, it changes the rules completely, and in an undesirable way.

One of the many challenges ahead is the “inertia” of those regions which have been heavily dependent on high-emission industries such as coal mining. An unrelated example from the sports world might help illustrate how painful the transformation could be. Over years of exploration and study, the Chinese Olympic national table tennis team built up a world-class lineup and system before learning that the game itself might be removed from the Olympics, making all their previous efforts useless. The same thing is happening within those carbon-intensive regions and industries. They spent years developing and catching up, struggled to optimize their structures and improve proficiency, and now they are forced to throw all their achievements away in less than 30 years.

All these challenges are real. The question now is how we can deal with them. In this regard, “Guiding Opinions” is valuable as it provides with some concrete guidelines:

  1. Collaboration between Multiple Departments

The document suggests adding climate change-related content to central and local laws and regulations, specifically in areas such as environmental protection, resource and energy utilization, land and space development, and urban and rural planning and construction. In other words, MEE is providing strong recommendations to the other three government departments: National Development and Reform Commission (NDRC), Ministry of Natural Resources (MNR), and Ministry of Housing and Urban-Rural Department (MOHURD). The collaboration across departments can encourage more ambitious actions from advanced provinces and cities. For example, during Shanghai Municipal Two Sessions, the city put forward an ambition to peak before 2025, five years earlier than the country’s national pledge. We are also expecting the city of Beijing and Shenzhen to make ambitious announcements. In particular, we hope to see substantial progress from Beijing during the 2022 Winter Olympics. For any ambitious city, overall planning and collaboration across various functions and between central government and locals is a task to be solved. World Resources Institute (WRI) has seen the challenges and has already dug into a few regions, in the hope of shedding lights on solutions. A few of the outcomes include the recently published Accelerating the Net-Zero Transition flagship report focusing on Beijing-Tianjin-Hebei, Guangdong-Hong Kong-Macao Greater Bay Area and the Yangtze River Delta, and the CUT flagship report on cleaner urbanisation.

  1. Deployment of Diverse Mechanisms and Measures

We have learned from Europe and the U.S.[2] that economic measures such as putting a price on carbon dioxide can be an effective way to make companies and individuals voluntarily reduce carbon dioxide emissions. There are already eight pilot carbon emissions trading markets in China, and “Guiding Opinions” has repeatedly emphasized these emission-trading systems’ capacity-building as major opportunities to develop green investment and green finance. The workplan is to experiment with the power sector (which makes up 30% of the nation’s emissions) first and then push the boundary from a few pilot cities to the whole country.

Another incentive is called the Science Based Targets initiative (SBTi), a powerful platform encouraging corporations to take more ambitious climate actions. More than 450 companies running business in China have already joined SBTi[3], including P&G, Estée Lauder, Coca-Cola, Dell and Adidas. We encourage corporations to get involved through various platforms and measures to achieve net-zero as soon as possible.

Furthermore, “Guiding Opinions” has also advised on using nature-based solutions (NBS) in the face of climate challenges. NBS can be a strong tool to enhance the protection of biodiversity and the governance of ecosystems including mountains, waters, forests, arable lands, lakes, and grasslands. It can also help strengthen climate resilience through climate adaptation, mitigation and environmental restoration.

  1. Centralization of Sub-National Actors

“Guiding Opinions” talks a lot about building a positive relationship between the central MEE and the local departments. A unified legislation, implementation and supervision is essential to making ambitious actions happen. In the past, local governments have been autonomous when implanting environmental laws, whereas now MEE will be playing a bigger role. This new approach will largely increase work proficiency and add to MEE’s role in the overall planning.

Levels of actors should also include engagement from other parties, including NGOs, think tanks and research institutions. Taking advantage of observances such as Earth Day, World Environment Day and National Low Carbon Day are crucial to a sound narration of how China has progressed while combating climate change.

  1. Commitment from Industries and Sectors

“Guiding Opinions” provides a feasible workplan across different industries, sectors and sub-sectors and points out the most important actions:

  1. Energy: Prioritize the use of fossil fuel alternatives on the supply side.
  2. Industry: Optimize raw material technology, upgrade industrial structure and strictly control the construction of high-energy-consumption and high-emission projects.
  3. Transportation: Speed up the optimization and adjustment of the transportation modal share[4], accelerate the transition from high-energy, high-polluting road transportation to clean, low-emissions water and railway transportation, promote energy saving and new energy vehicles (NEVs)[5].
  4. Waste: Strengthen the centralized disposal and utilization of livestock waste, sewage and garbage; strengthen the control of methane, nitrous oxide and other greenhouse gases.

Sub-sectors including steel, building materials, nonferrous metals, chemicals, petrochemicals, electric power and coal are encouraged to bring about specific peaking timelines and action plans.

What more need to be done during 14th FYP

Although “Guiding Opinions” signals an obvious progress from the central government, gaps within across national and sub-national levels do exist.

One of the opportunities is to close the gap at the national level, especially in areas of necessary NDC enhancements, long-term strategy (LTS) and national (and sectoral) targets for non-CO2 reductions. With its 2020 climate targets met, China is on track to exceed the climate targets it set in its NDC in 2015. “Guiding Opinions” may wish to emphasize on the Paris Agreement mechanisms, particularly enhancing China’s NDC for more ambitious climate and energy targets and formulating an LTS and specific work plan to achieve 30&60 Goals, in line with the country’s mid- and long-term socioeconomic development strategy.

Another priority for the upcoming Two Sessions would be closing the gap across national and subnational efforts, and the central government splitting its overall goal to the appropriate provinces and cities wisely. Further guidance is needed on these five key issues:

  1. Despite the ground-breaking mentions of a coal cap and dual control, no detailed guidelines or next steps have yet been laid out. In this case, the “how”s are critical.
  2. When suggesting the capacity and system building of a national emission trading system. “Guiding Opinions” emphasized the power sector as a pioneer in the carbon market. However, there are tons of other sub-sectors that need clearer solutions.
  3. While “Guiding Opinions” has focused on CO2 emissions, it avoids covering China’s non-CO2 emissions, which are a significant contributor to the country’s GHG emissions. China can set a target for non-CO2 emissions, stabilize non-CO2 emissions starting in 2020 and begin their decline as soon as possible after 2025.
  4. An important sector — construction and building — is missing from the document and thus requires further discussions.
  5. While “Guiding Opinions” offers step-by-step action plans and recommendations for new climate mitigation regulations, only limited attention is paid to climate adaptation. This means a lack of backup plans when the goals are not met in time due to various reasons.


[1] According to Thomson Reuters Practical Law, Guiding Opinions refers to the official documents issued by government authorities to communicate government policies and put forward non-specific and non-operational opinions and solutions on issues of importance to the Chinese authorities.

[2] A 2019 study by the American Council for an Energy Efficient Economy (ACEEE) finds that efforts to put a price on greenhouse gas emissions are growing in North America.

[3] The Science Based Targets initiative (SBTi) drives ambitious climate action in the private sector by enabling companies to set science-based emissions reduction targets. Currently there are 450 companies which run business in China have already joined SBTi. Worldwide, more than 1000 companies have already made commitments under the powerful SBTi.

[4] A modal share (also called mode split, mode-share, or modal split) is the percentage of travelers using a particular type of transportation or number of trips using said type. Modal share is an important component in developing sustainable transport within a city or region. In recent years, many cities have set modal share targets for balanced and sustainable transport modes, particularly 30% of non-motorized (cycling and walking) and 30% of public transport. These goals reflect a desire for a modal shift, or a change between modes, and usually encompasses an increase in the proportion of trips made using sustainable modes. (Wikipedia)

[5] New Energy Vehicles (NEV) = Plug-in Hybrid Vehicle (PHEV) + Battery Electric Vehicles (BEV).

Could 2021 be a turning point for forests and climate change?

This story first appeared on the World Economic Forum.

19 February 2021

  • There is a renewed sense of optimism around tackling climate change – the international community must harness this momentum and scale-up efforts to protect and restore tropical forests.
  • A coalition of private and public sector partners have launched the Green Gigaton Challenge, which aims to mobilize funds to achieve its target of one gigaton of high-quality emissions reductions, per year, by 2025.

There is a good possibility that 2021 may turn out to be the spring after a long, dark winter. The light at the end of the COVID-19 tunnel now appears within reach. The largest economy in the world has rejoined the international community in fighting climate change. The second largest economy has committed to a carbon neutrality target. The climate ambitions of the EU not only survived the pandemic, but rather got bigger and bolder.

Private sector commitments to net-zero are growing very rapidly indeed (often under pressure from governments). More companies are taking steps to address their climate risks and impacts, resulting in strong demand potential for offsets as a supplementary tool alongside internal de-carbonization. This renewed sense of optimism is an opportunity not to be wasted.

However, if we are going to make 2021 a turning point for forests and climate change, we need to adjust our strategy. Delivering the full mitigation potential of forests will require as much ambition as it will require pragmatism and recognizing where the opportunities lie for a quantum shift in scale, funding and results. We need to concentrate efforts and attention on coming together to support an ambitious objective for COP-26 and embrace flexibility on scaling-up finance to protect and restore tropical forests – or REDD+, which stands for Reducing Emissions from Deforestation and Forest Degradation.

Setting a measurable and ambitious objective for COP-26

We propose that COP-26 delivers a public-private bid for one gigaton of high-quality emissions reductions with a floor price for forest carbon starting at $10/tCO₂e and adjusted gradually upwards over time. This would represent an unmistakable signal of financial ambitions and be a powerful force to help change the economics and politics of deforestation in many parts of the world so as to make conservation and sustainable use of forests an attractive alternative. Success in delivering one gigaton of emissions reductions would in turn catalyse further even larger-scale private and public funding commitments. We are calling this the Green Gigaton Challenge.

We aim to replicate for deforestation what has been one of the drivers of change pushing for decarbonization in electricity and other sectors of the world economy: the combined effect of carbon prices and predictable demand (such as feed-in tariffs or other subsidized revenue streams for renewable energy). Prices send information to citizens (or “market participants”) on scarcity, and this in turn, signals opportunities for investment and behaviour change.

Development finance grants and loans will still play an important role in protecting forests. However, given the huge investment costs for forest country governments of ending deforestation, the bottleneck of due diligence process, accompanying traditional “input-based” aid has little hope of giving forest countries the fiscal resources to meet ambitious targets.

On the other hand, results-based finance that pays for delivery of measurable outcomes in terms of forest and climate protection has the potential to facilitate larger scale and more effective international funding support, as well as to mobilize private sector participation. Results-based finance allows donors to commit more resources to verifiable results as the risk of achieving those results is shared with the countries responsible. Another advantage is that forest countries themselves are better able to choose their own pathways to achieving goals, avoiding the conditionality often associated with input-based aid programmes.

Private sector investment and innovation as well as efforts by agribusiness companies and consumer countries to take deforestation out of commodity supply chains will also be important in delivering the full mitigation potential of forests. However, these actions can only go so far in the absence of ambitious policies and incentives on the ground in forest countries.

Predictable flow of finance is essential

With a sufficiently high and predictable carbon revenue stream, forest countries could expand national budget allocations knowing that the investment needed to achieve REDD+ outcomes would not lead to a long-term increase in the national debt. Credit rating agencies and development finance institutions could treat efforts to achieve and go beyond NDC goals as investments delivering positive financial returns. And donor governments could more confidently provide additional grant funding for capacity building.

Results-based payments have already shown results, even at low scale. Over the period from 2004-2012, Brazil demonstrated that a combination of indigenous territories and protected areas, strengthened law enforcement, finance reforms, supply chain initiatives plus some at-scale incentives can achieve dramatic results.

During this period, Amazon deforestation fell by 80%, reducing an estimated 3 billion tons CO₂e, or more than any other country has achieved in terms of reducing global emissions. It is also true that with lapsed enforcement, scant economic incentives to protect forest, and a government hostile to forest protection and indigenous rights, in 2019 deforestation rose to its highest level since 2008. While this trend is a major concern, deforestation remains below pre-2005 levels.

The $2 billion provided to Brazil through the Amazon Fund over 11 years was a small sum in the context of ending deforestation in the Amazon basin, especially when compared to agricultural loan subsidies offered annually without any environmental conditions. While recognizing the generosity of a too-limited group of donors, and being genuinely grateful for these contributions, they are not enough to sustain and extend progress and must be paired with significant policy and finance reforms.

Whether the Green Gigaton Challenge can make a difference is a function of price and volume: there is a number where the economics for conservation becomes overwhelmingly compelling. For example, a 1 gigaton annual bid over a decade starting at a floor price of $10/tCO₂e and increasing gradually to $30/tCO₂e would move the needle and change the trajectory of forest-use in the Amazon, Congo and Indonesian forests.

If you think this is an extreme example, keep in mind that a price of $30/tCO₂e is below the price of the allowance in the European ETS and that the total size of the bid is a fraction of the forecast costs of achieving the goals of the Paris Agreement – costs which could rise very rapidly if we cannot end deforestation. A recently published paper shows that realizing the full estimated potential for REDD+ would reduce the risk-adjusted carbon price by $45/tCO₂ in 2030, such that mitigation at prices below is expected to generate net mitigation cost savings for society).

Embracing flexibility

The launching of a REDD+ bid and the establishment of an attractive floor price will require financial support from the international community, and therefore a consensus on what constitutes a high-quality emission reduction. We believe that jurisdictional REDD+ is the best approach to ensure high levels of social and environmental integrity, as well as to mobilize the government actions that are needed to drive forest protection at a large scale.

In past years, several REDD+ standards have been used to assess quality, each attached to a particular funding source. Among them, and not considering project-based carbon credits for the voluntary markets, we have the standard applied by the World Bank`s Forest Carbon Partnership Facility, the Tropical Forest Standard endorsed in 2019 by the California Air Resource Board (though REDD+ credits are not yet allowed in its Cap-and-Trade Program) and the Scorecard by the Green Climate Fund, which is currently under review. ICAO’s CORSIA has approved two REDD+ standards at the jurisdictional level, ART-TREES (Architecture for REDD+ Transactions – The REDD+ Environmental Excellence Standard) and the VCS-JNR (Verified Carbon Standard – Jurisdictional and Nested REDD+). The latter is currently undergoing a major revision.

It would be simpler to have a single REDD+ standard that gains the trust of donors, countries and private stakeholders. Those of us who interact with REDD+ government officials regularly hear complaints about the transaction costs of having to meet different standards for RBPs. These complaints are genuine and valid. In the meantime, we believe that ART-TREES is a good candidate to enable the market to get started and this does not close the door to the coexistence of high-quality standards. Our focus is on quality.

Jurisdictional approach and REDD+ projects

Would the choice of a jurisdictional approach close the door to participation of the private sector through REDD+ projects? Absolutely not. Private sector action and innovation on the ground is vital and can come in through projects as well as a variety of other public-private partnership arrangements within jurisdictional approaches. We do not believe that the available pot of private funding for forest conservation is fixed or limited – quite the contrary. It could grow rapidly once supply of high-quality emission reductions is unlocked. However, jurisdictional REDD+, including nested projects, provides significantly higher levels of social and environmental integrity than a stand-alone project approach. There is no need to wait for the nesting issue to be resolved before scaling the demand signal. Our proposal for a gigaton REDD+ bid will create incentives to accelerate jurisdictional programmes, including nesting of projects and other on-the-ground efforts.

Looking ahead

This year provides a unique opportunity to make forests a real pillar of climate mitigation efforts. This will require great ambition, a focus on key elements of change, as well as pragmatism and flexibility as we scale-up REDD+. A key element of change, and one that has not been tried so far, is to send a clear and unmistakable signal of ambitions for REDD+. The Green Gigaton Challenge aims to be such a signal. Let´s work together to ensure a bid for a gigaton in high-quality REDD+ emission reductions by COP-26.

How Do Countries’ New Emissions-Reduction Plans Stack Up?

This story first appeared on the WRI blog.

26 February 2021 | A new UN report finds that countries’ emissions-reduction commitments under the Paris Agreement are falling far short of what’s needed to prevent the most dangerous impacts of climate change.

It is imperative that countries that have not yet submitted their plans deliver much greater ambition this year and that countries that already put forward weak offers in 2020 revise their commitments upward.

In the 2015 Agreement, countries adopted a process in which they would submit more ambitious climate commitments (known as nationally determined contributions, or NDCs) every five years. Recognizing that the pledges they brought forward five years ago were insufficient to meet the Paris Agreement’s long-term goals, this process was meant, over time, to nudge the world onto a pathway to limit global temperature rise to 1.5°C (2.7 degrees F). The first of these “ambition cycles” is now underway, with the expectation that countries submit new NDCs ahead of the COP26 climate summit in Glasgow in November 2021.

The UN report examines the 48 NDCs from 75 Parties submitted through the end of 2020. It finds that these commitments will only cut emissions by about 2.8% relative to the pledges those countries submitted five years ago. Globally, to limit temperature change to 1.5°C, new or updated NDCs need to cut 2030 emissions by around 55% below the initial pledges.

While the UN report paints a grim picture, it’s not the whole picture. What the remaining countries do collectively over the next nine months will be decisive. Countries that have not yet submitted updated or new NDCs — plus several that have indicated they will resubmit with stronger targets — represent 75% of total global emissions. And there are reasons to believe these countries will go beyond what’s been done so far.

For one thing, 58 countries representing over half of global emissions have now committed to net-zero emission targets by mid-century. Many of them — including China and the United States — have not yet submitted updated NDCs, but their net-zero commitments suggest that their NDCs will need to be ambitious. Japan, South Korea and New Zealand — which initially submitted NDCs that did not strengthen ambition, but then committed to net-zero emission targets by 2050 — now say they will strengthen their NDCs before COP26.

Taken together, these net-zero goals would limit warming to 2.1 degrees C if they are achieved, down from the projected 3 degrees C of warming the world was on track for. But delivering on this promise will require countries to take near-term action, which is where the NDCs are essential. The spotlight is now on those countries that have yet to come forward with enhanced NDCs for 2030 — especially the major emitters.

Below, we assess the emissions-reduction commitments in the national climate plans submitted thus far, and what needs to happen ahead of COP26:

Which countries increased ambition in their new NDCs?

More than 40 countries (including the 27 EU member states) submitted plans that will deliver deeper emissions cuts than their initial NDCs.

The EU27 strengthened its 2030 target from an “at least 40%” reduction from 1990 levels to an “at least 55%” reduction. The UK, submitting its first NDC after leaving the EU, committed to 68%, beyond what would have been its contribution to the initial EU28 NDC.

In Latin America, Argentina committed to cut 2030 emissions 26% lower than its initial target; Colombia adopted an emissions cap nearly 37% lower than its previous target; and Chile, Costa Rica and Peru also strengthened their commitments.

Finally, a number of island states and other vulnerable developing countries such as Fiji, Jamaica, Kenya and Senegal also adopted more ambitious commitments.

For more than a dozen additional countries, it’s not possible to quantify the effect of their new plans on their GHG emissions, often due to a lack of data in the initial NDC. But most of these countries have also adopted more robust commitments.

Brunei, Rwanda and the United Arab Emirates, for example, established economy-wide emissions-reduction targets for the first time in their new NDCs. Other countries, including Nepal and Nicaragua, strengthened or added sector-specific targets. Countries such as Rwanda and Bangladesh added or strengthened policies on highly potent short-lived climate pollutants, including HFCs, methane and black carbon.

Which countries didn’t strengthen their NDCs?

Several countries — including Japan, South Korea, New Zealand, Australia and Singapore — submitted NDCs with GHG reduction targets identical to the submissions they put forward five years ago. Nevertheless, there is some cause for hope: Japan, South Korea and New Zealand have now indicated an intent to update their targets in the lead-up to COP26, following on their pledges to achieve net-zero GHG emissions by 2050. Australia and Singapore, on the other hand, have not signaled any intention to strengthen their targets.

Which countries submitted weaker NDCs?

Even worse, Brazil and Mexico weakened their emissions-reduction targets compared to what they committed to in 2015. At face value, both countries’ 2030 targets look the same as in their initial plans — a 43% cut from 2005 emissions and a 22% cut relative to business-as-usual emissions, respectively. But the updated NDCs contain other revisions that reduce the impact of their targets on 2030 emissions: Brazil increased its estimate of 2005 emissions by 38%, while Mexico increased its business-as-usual projection by 1.8%. As a result, 2030 emissions permitted under the pledges will be higher than they would have been under countries’ initial NDCs.

Which countries haven’t unveiled their national climate plans yet? And which are likely to enhance ambition?

Upwards of 80 additional countries have committed to submit enhanced NDCs. This includes major economies like China, the United States, Canada and South Africa. The United States and Canada have said they will complete their NDCs ahead of the Leaders’ Climate Summit on April 22, 2021, and President Biden has made it clear that climate action will be a top priority for his presidency.

To put the 1.5-degree target in reach, these remaining countries will need to take a far more aggressive approach than we’ve seen to date. To start, the United States should commit to cut emissions by 50% from 2005 levels by 2030, and China can peak CO2 emissions by 2026 and commit to ambitious targets for non-CO2 gases. Other major economies like India and Indonesia, which have not yet committed to enhancing their NDCs, will also need to step up their efforts as well if we are going to get the climate crisis under control.

How will we know if new national climate plans collectively put us on a path to limiting dangerous levels of warming?

Globally, 2030 greenhouse gas emissions need to be 55% lower than in the initial round of NDCs in order to limit warming to 1.5 degrees C and prevent the worst impacts of climate change. If the countries that submitted NDCs to date continue to fall so far short of that benchmark, the countries that haven’t yet submitted NDCs would have to make even deeper cuts in order to make up lost ground.

Instead, all countries, and especially major economies, must summon all the ambition they can muster — whether they have already submitted an NDC, have committed to do so, or are still holding out. The climate crisis can’t wait.

Shades of REDD+
Corresponding Adjustments, Kyoto Protocol Nostalgia, and a Proposed Way Forward

25 February 2021 | Last month, the Taskforce on Scaling Voluntary Carbon Markets published its final report, in which it sketches a path towards a 15-fold increase in size for the voluntary carbon market, to between 1.5 and 2 billion metric tons of carbon dioxide annually, by 2030. However, a number of non-governmental organizations and governments are concerned that the voluntary carbon market, instead of promoting mitigation, could undermine policy action in developing countries. They demand, among other quality criteria, “corresponding adjustments” as a remedy against the risk of greenwash that comes with net-zero and other corporate climate pledges.

Reflecting on comments received in response to my previous blog on corresponding adjustments, I contemplate the topic once more – this time focusing on why sustaining political will is more important than a myopic obsession on accounting. This blog looks at the link between additionality and political ambition and, from there, sketches a possible compromise solution that acknowledges the full need for transparency on corporate offsets without putting a brake on Paris Agreement ambition.

Accounting and a False Sense of Control: Kyoto’s Good Old Times

Avoiding double-counting of emission reductions is essential to ensuring the integrity of carbon markets. The Paris Agreement prescribes tallying accounts of countries that participate in carbon market transactions under its Article 6 through “corresponding adjustments.” Emission reductions can only be counted against one national climate pledge (dubbed NDC for “nationally-determined contribution”), or another international compliance system, such the Carbon Offsetting and Reduction Scheme for International Aviation.

However, when it comes to the voluntary carbon market, the current controversy it is not about double-counting of emission reductions, it is about double-claiming of emission reductions, which is completely different.

Double counting happens when the same emission reduction is accounted toward more than one climate pledge, which undermines the environmental integrity of both the pledges and emission reductions. Double claiming, however, happens when two different entities or jurisdictions claim some credit for the same emission reduction, as when a company in one country helps to reduce emissions charged to another country’s carbon accounting. While the Paris Agreement foresees measures against double counting -corresponding adjustments-, there is no indication that the drafters of the agreement were concerned about double claiming.

Double-claiming may obfuscate corporate statements on compensated emissions (offsetting), but it does not jeopardize the environmental integrity of the Paris Agreement.  Requiring corresponding adjustments to avoid double-claiming is shooting sparrows with canons. A cumbersome and complex measure is put in place that effectively disincentivizes urgent investments in climate mitigation. It may be worth asking – if mitigation action is real, and the emission reduction is measured and only captured once under the Paris Agreement – why are so many market observers worried about the semantics of a claim?

We may be dealing with a good deal of unprocessed mourning for the late Kyoto Protocol and its supposedly tidy accounting, where countries were listed with negotiated targets in an Annex of the Protocol, which allowed the establishment of a cap-and-trade system based on allocated assigned amount units (AAUs). Countries were linked via a transaction log, and adjustments of accounts were the automatic consequence of AAU trades among countries. The accounting was clear and clean and seemed to reflect the reality neatly.

In contrast, there are no binding international targets under the Paris Agreement and no new commodity that would be comparable to AAUs. NDCs are as messy as the world, as different as national circumstances demand, and rely on bottom-up action and not top-down international orders for their compliance.

The Kyoto Protocol is history, and for all its accounting beauty, let’s remember that it did not work. It covered an increasingly small part of the world’s emissions, the cap was full of hot air, a lot of windfall emission reductions were credited, it all but forgot about adaptation, and did not manage to keep the initially regulated countries committed to its system. The moment they fell out of love with the Protocol, discontented countries – such as Canada, and later Japan, New Zealand, and Russia – left it without any sanctions.

Accounting alone does not result in action and, deceptively, it gives a false sense of control over action.  Accounting is essential for transparency, and it’s a condition for accountability. However, it also tends to create a parallel universe that risks becoming more powerful than the reality that it seeks to reflect. Accounting can easily result in complex societal myth-making about control and predictability. It is therefore essential to constantly review the purpose and assumptions that guide accounting in our particular case: does it incentivize mitigation, or does it hold it back?

The verdict on the Paris Agreement is still pending. But what is clear is that it promises a more realistic path towards globally coordinated emission reductions. Unlike the Kyoto Protocol’s top-down climate targets, in the Paris Agreement’s “pledge and review” approach, each country sets its own target, which allowed for the global coverage of emissions. It elevates domestically driven climate policy into the international sphere while providing a mechanism for countries to ratchet up their target over time.  In other words, it bets on incentives and positive feedbacks instead of -largely ineffectual- sanctions. Harnessing government, corporate, community, and individual engagement, the Paris Agreement empowers all of us to contribute to its success. The voluntary carbon markets form part of that symphony of action.

Controlling offset claims may be the last effort to control climate change via accounting and – in this case – wording. However, multifaceted cooperation around mitigation action is far more powerful than a diced and sorted accounting and claims system, as neat as that would be from a bookkeeping perspective. Robust greenhouse gas inventories paired with overall transparency on progress towards climate goals are of supreme importance to ensure accountability under the Paris Agreement, not the question of who claims to have contributed to which emission reduction in this system.

Additionality Testing and Corresponding Adjustments

By ensuring that certified emission reductions are real, carbon standards can help to ensure that emission reductions and removals are additional to what would otherwise occur. This requires a review of additionality in the context of countries’ NDCs.

Where an emission reduction is additional, it does not need a corresponding adjustment to claim an offset. In the context of NDCs, an additional emission reduction is one that is not claimed by the government of the country where the mitigation activity takes place. Where a country has adopted economy-wide emission reduction targets backed by a set of clear policies and measures, emission reductions would have to go demonstrably beyond this target. However, this is a tall order that very few – mostly developed – countries will meet. And even where such clear targets have been established, these are vulnerable to the winds of change. Recent experience in the US and Brazil shows that a turnover in political leadership can result in a dismissal of previous climate ambition. This can make emission reductions additional that would have been part of the baseline scenario without a change in government.

But very few countries have absolute and predictable mitigation targets to start with. Many NDCs are not more than aspirational expressions of intent. They lack policy backing and are rarely the result of budgetary planning or emissions modeling. In many cases, the policy measures that could achieve climate targets are in constant flux, and very few countries have defined a concrete pathway to achieve their NDC. Some developing country targets are explicitly conditional on international finance and support. In these cases, NDCs formulate a broad framework for action rather than a pathway for government policy. Countries often depend on an additional push by corporates and non-state actors to achieve their NDCs. In these countries and contexts voluntary carbon market projects deliver mitigation that goes beyond what would have happened anyway.

The Paris Agreement and NDCs cannot replace activity-level additionality tests. National climate pledges differ in their specificity and ambition, are more or less concrete, and backed by different levels of political commitment. It is illusory to assume that NDCs are a fait accompli—that at the moment they are communicated to the UN climate secretariat, their compliance can be taken for granted.  Additionality testing can be facilitated by transparent sector benchmarks and standardized baselines, but it remains embedded in the context of the national circumstances of the host country. Projects that are required by regulation, or are considered “common practice”, are already excluded by additionality tests required by most standards. In addition, the establishment of additionality should consider potential future legislation, at least to the extent that it has already entered the planning stage.

A way Forward?

Looking at a compromise that ensures full transparency while creating positive incentives for action, the following measures could show a way out of the current impasse:

  • Carbon finance transactions that are formalized under Article 6.2 or 6.4 of the Paris Agreement come with a transfer of ‘internationally transferred mitigation outcomes’ and a corresponding adjustment to the transferring and receiving countries’ NDC accounting.
  • Where domestically binding targets exist, corporates could claim offsets if emission reductions generated under voluntary carbon market standards are backed by corresponding adjustments. Alternatively, voluntary carbon market transactions can be treated as climate finance that supports the NDCs of the country in which the project takes place. In this case, corporates could claim an emission reduction but not an offset (following, for example, the UK’s woodland carbon code).
  • Where such binding targets do not exist, additionality testing would consider the likelihood of policies to be implemented. Additional emission reductions could be claimed as offsets without requiring corresponding adjustments. Where the project fails to pass the additionality test, corporates can seek to procure a corresponding adjustment or simply claim to support the host country NDC.

Despite all concerns about greenwashing, corporate climate commitments should be encouraged and welcomed. Not all of them may be “gold standard” – in fact, some may be rubbish – but these commitments are voluntary and, by definition, additional to national regulation. This means that corporates act where governments fail to regulate and demand such action. For sure, civil society has to keep a keen eye on the credibility of corporate pledges, and how sincere companies pursue their implementation. However, as governments fall short on meeting international climate finance goals, we should embrace the unprecedented level of climate finance that corporates, through voluntary carbon commitments, can mobilize.

How You Can Participate in this Series

This is the first in a continuing series of articles focused on REDD+. We invite you to post comments or propose your own submissions as the series evolves.

You can propose submissions by contacting the EM News Desk at info@ecosystemmarketplace.com. Please write “REDD+ Series Submission” in the subject header.

Please tick this box to let us know you’re not a bot.

You can unsubscribe at any time by clicking the link in the footer of our emails. For information about our privacy practices, please visit our website.

Ecosystem Marketplace Announces New Suite of Data Sharing and Intelligence Platforms

28 January 2021 | A new suite of data platforms aims to enable more timely information on voluntary carbon markets price data, transactions, and dynamics, announced today by Ecosystem Marketplace, an initiative of Forest Trends. These developments will improve the ease of reporting and data connectivity for a growing global network of stakeholders including market participants and EM Carbon Survey respondents. 

As private sector climate commitments such as net-zero multiply, demand for more transparent carbon markets information is increasing among companies, investors, and governments. The call was amplified this week with the publication of final recommendations from the Mark Carney-led Taskforce on Scaling Voluntary Carbon Markets (“the Taskforce”)as well as a new consultation document by the World Economic Forum and McKinsey & Company.  

Both the Taskforce and the World Economic Forum/McKinsey reports have identified a lack of comprehensive and regular information on carbon credit transactions, pricing, and retirements being a primary bottleneck to scaling the voluntary markets. 

“We are thrilled to announce what we are informally calling Ecosystem Marketplace 3.0’, which will offer enhanced carbon market tracking and powerful new capabilities for data accessibility to support market transparency, a crucial ingredient for scale,” said Stephen Donofrio, Director of Ecosystem Marketplace. 

We have the largest, most dynamic dataset on voluntary carbon market transactions in the world,” said Donofrio. “Transparency is a stated goal of the Taskforce. We’re excited for our developments will up open new opportunities for collaboration and increase the regularity of our ability to benchmark progress on scaling markets.” 

“Access to transparent and regular information on carbon credit volumes, pricing, and retirements have a key role to play as we scale voluntary carbon markets,” says Edward Hanrahan of the International Carbon Reduction & Offset Alliance. “Ecosystem Marketplace has long been the go-to source for objective market information through its annual market reports, and we’re excited to see this shift to offering deeper, more frequent intelligence.” 

Ecosystem Marketplace is a globally recognized platform for tracking carbon markets, with data reported from projects in nearly 40 countries in 2020. Over its 15-year history, EM has surveyed the market at least once per year to produce an annual State of the Voluntary Carbon Markets report.  

In its pilot phase, expanded services will also include united carbon credit issuance and retirement database from the voluntary carbon markets’ most prominent registries, including Verra, the Climate Action Reserve, American Carbon Registry, Gold Standard, and Plan Vivo. Future iterations will integrate data from additional market actors and Ecosystem Marketplace partners. The database will be updated monthly, with the capability to move to a daily service in the future in step with shifts in market liquidity.  

An enhanced online Carbon Survey platform will enable us to effectively reach more than 650 active market participants, which includes project originators, brokers, and retailers– the largest survey of its kind available by far, says Patrick Maguire, Senior Program Manager of Ecosystem Marketplace. Ecosystem Marketplace will also align its data collection with the Taskforce’s recommendations. 

“Markets are experiencing an influx in demand for voluntary carbon offsets,” remarks Michael Jenkins, CEO of Forest Trends. “We need to build upon existing market infrastructure ready to scale rapidly, including robust and credible information. It’s the only way that voluntary carbon markets can grow without sacrificing quality.” 

Ecosystem Marketplace is currently accepting applications to participate in this pilot phase. Invited pilot partners include Ecosystem Marketplace’s Strategic Supporters and a select group of committed organizations that have responded consistently to EM’s Carbon Survey. Organizations interested in participating in the pilot phase of EM 3.0 can inquire at info@ecosystemmarketplace.com. 

The State of the Voluntary Carbon Markets 2020 reports are available free for download at the EM Carbon Markets Hub. 

Media Contact: Genevieve Bennett, gbennett(at]forest-trends.org

Most Chocolate Companies Don’t Know Where Their Cocoa Comes From

17 February 2021 | You’ve got to hand it to those clerks of the old British Empire. Their records were good enough to identify the first farmer who planted cacao trees in Ghana way back in the 1870s. His name was Tatteh Quarshie, and he grew the trees from a handful of cocoa beans he’d acquired in Equatorial Guinea. Thus did a fruit that evolved in the understory of the Amazon, and which the Mayans called “Fruit of the Gods,” become the primary cash crop of Ghana and Côte d’Ivoire. Today, these West African nations provide 70 percent of the raw cocoa on which the $180 billion chocolate industry depends.

Don’t, however, expect most of those multi-billion-dollar candy conglomerates to tell you which farms they get their beans from — or whether they’re the product of child labor or came at the expense of precious endangered forest, more than 90 percent of which have disappeared in these two countries since the 1990s.

That’s because just nine of the world’s 69 leading chocolate companies report being able to trace their supplies to individual farms, although an additional 30 companies say they’re in the process of doing so. At the same time, just six are implementing sustainability best practices agreed to under the Accountability Framework Initiative (AFi), which is a global environmental coalition formed in 2019 to end deforestation in commodity supply chains.

These are some of the findings in a new report called “Trends in the Implementation of Ethical Supply Chains,” which was published jointly by AFi and the Forest Trends Supply Change initiative, which tracks self-reported progress towards sustainability targets.

The six companies that report developing commitments in accordance with AFi guidance for their cocoa supply chains are Barry Callebaut, Cargill, Mars, Olam, Mondelez, and Unilever.

Why it Matters

Cocoa has been a key driver of deforestation in many countries, but most of the cacao trees planted in Ghana and Côte d’Ivoire since 1990 are losing their productivity sooner than expected – in part because cacao thrives in shade and suffers in direct sunlight. As productivity drops, impoverished farmers move into the remaining forest, decimating valuable habitat and accelerating climate change.

To avert disaster, dozens of chocolate companies have vowed to help farmers plant back better. In 2017, they created the Cocoa & Forests Initiative (CFI), which aimed to end deforestation by, among other things, supporting the adoption of agroforestry techniques and implementing procedures for tracking and tracing sustainably-produced supplies.

”We see growing ambition, but not all commitments are created equal,” says Philip Rothrock, who manages the Supply Change initiative and co-authored the report.

“More than half – or 38 – of the influential companies we tracked have sustainable cocoa commitments, and half of these – or 18 – are reporting progress toward those goals,” he added. “Furthermore, 28 are conducting some sort of risk assessment for deforestation in their cocoa supply chains, while 39 are implementing traceability systems.”

What Next?

AFi was formed in 2019 in response to corporate concerns about the diverse and often contradictory reporting demands from environmental NGOs. Under the guidance, corporate commitments to end deforestation should meet basic criteria, such as including a target date, covering the company’s entire supply chain, and not just certain commodities.

“There’s still room for companies to broaden the scope of their commitments to be more comprehensive,” says Rothrock. “For example, many company commitments still do not include due dates nor do they cover all the regions they source from or all of the subsidiaries and joint ventures they control. Clearly, the devil is in the details.”

He emphasizes that governments of producer and consumer nations also have a role to play in promoting sustainable supply chains and points to earlier research, also from Forest Trends, showing that demand-side regulations can have a dramatic effect on forest cover.

“Emerging legislation in the EU, UK, and US to control imports of commodities linked with deforestation could be game changer,” he says. “By requiring greater transparency within cocoa supply chains, this could help level the playing field.” In fact, three influential companies Mars, Mondelez, and Barry Calbuat, alongside several environmental groups have already called for stronger environmental and social requirements for EU legislation. In making these changes, these consumer markets could have strong leverage to encourage sustainable production, but the key is how will governments enforce these upcoming rules and how will companies meet them?

About this Series

This story is part of a two-part series called “Ripening Cocoa ”, which is a companion to the intermittent series “Forests, Farms, and the Global Carbon Sink.”

Mandatory Sustainability Reporting Moves Closer to Reality

3 February 2021 | The Trustees of the International Financial Reporting Standards (IFRS) Foundation met on Monday to review responses to a consultation paper published last year — specifically, the board addressed responses focused on whether there was enough demand for global sustainability standards for the IFRS Foundation should play a role, and, if so, what the requirements for success in doing so. The responses indicate growing and urgent demand to improve the global consistency and comparability in sustainability reporting, as well as strong recognition that urgent steps need to be taken and broad demand for the IFRS Foundation to play a role in this.

IFRS Standards are required in more than 140 jurisdictions, but not in the United States, which follows the Financial Accounting Standards Board’s (FASB’s) Generally Accepted Accounting Principles (GAAP). The two bodies have tended to align over the years, and a move to mandatory sustainability standards could accelerate demand for renewable energy and carbon credits. The announcement comes just days after the Taskforce on Scaling Voluntary Carbon Markets unveiled a “blueprint” for ensuring that voluntary carbon markets can scale to meet growing demand without sacrificing quality.

Although voluntary reporting of sustainability criteria has soared in the past decade with 90 percent of companies in the S&P 500 index issuing some sort of sustainability report in 2020, there are no mandatory reporting requirements and no standards to ensure reporting is comparable and complete.

The IFRS Foundation began exploring the issue in response to a request from the International Federation of Accountants (IFAC) as well as indications from regulators in the United Kingdom and Europe that mandatory reporting would soon be required.

Given this demand, the Trustees have agreed to undertake a further detailed analysis of feedback on the requirements for success and other conditions to be satisfied prior to consideration of whether to establish a new board. The Trustees agreed on the formation of a Trustee Steering Committee to oversee the next phases of work and added an additional key requirement for success—being the need for urgency to deliver global standards, most notably on climate.

Throughout the three-month consultation period, the Trustees led comprehensive outreach programs within their respective jurisdictions to inform their decision-making and to encourage broad participation across all geographies and stakeholder groups. This included more than 400 engagements across 33 jurisdictions, participation in more than 20 public events hosted by third parties and the hosting of webinars that attracted more than 3,000 registered users. Following that outreach, the IFRS Foundation received 576 comment letters from a diverse set of organizations and individuals from around the world. All responses to the consultation paper are publicly available.

The Trustees will be meeting next on 2-4 March 2021. Given the growing and urgent demand, the intention would be for the Trustees to produce a definitive proposal (including a road map with timeline) by the end of September 2021, and possibly leading to an announcement on the establishment of a sustainability standards board at the meeting of the United Nations Climate Change Conference COP26 in November 2021.

Unpacking the New “Blueprint” for Bigger (and Better?) Voluntary Carbon Markets

27 January 2021 | After four months of exhaustive consultation among nearly 200 environmental and financial entities, including Ecosystem Marketplace, the Taskforce on Scaling Voluntary Carbon Markets (TSVCM) today released its “blueprint” for expanding voluntary carbon markets to support the global transition to net-zero greenhouse-gas emissions by 2050.

Launched in September by former Bank of England Governor Mark Carney (pictured) and the Institute of International Finance (IIF), the Taskforce estimates that carbon markets must grow at least 15-fold by 2030 to cut net man-made greenhouse-gas emissions in half by the end of the decade – a goal that the Intergovernmental Panel on Climate Change (IPCC) says is necessary to prevent average global temperatures from rising to more than 1.5 degrees Celsius (2.7°F) above preindustrial levels.

Such market growth will mean nothing if the underlying credits don’t work or if companies use them to continue emitting, and the Taskforce aims to forge agreement on practices that can help voluntary carbon markets scale up in ways that deliver verified ecological outcomes. The blueprint offers 20 specific actions divided among six topics, ranging from the creation of “Core Carbon Principles” (CCPs) and exchange-traded reference contracts to the establishment of a global regulator to coordinate existing standard-setting bodies. Once CCPs are established, the Taskforce envisions exchange-traded futures contracts that will provide a global reference price for a verified emission reduction as well as ways of valuing “additional attributes” such as habitat conservation and gender equality.

The blueprint identifies several impediments to growth, including the historical lack of climate awareness and the fragmented nature of existing voluntary markets and standards. It recommends ways of moving forward and establishes working groups to further develop recommendations in Phase 2 of the process.

Core Carbon and a Base Reference Price

As Ecosystem Marketplace’s annual State of Voluntary Carbon Markets (SOVCM) reports make clear, the voluntary carbon market is primarily an over-the-counter market, with credits from individual projects being sold bilaterally to intermediaries before finding their way to the public. The Taskforce recognizes that this practice may continue, but it envisions a global reference price similar to those used in other financial markets, especially those related to commodities.

In these markets, exchange-traded instruments – such as futures contracts built around specific baskets of interest rate products or bushels of corn meeting agreed-on grades and delivery points – are traded on a government-regulated exchange to generate a reference price, which in turn is used to set or negotiate prices in other grades or locations. These other grades and locations can result in either a premium or discount to the reference price.

To create the CCPs and market infrastructure, the Taskforce spawned working groups to also develop an umbrella organization that will coordinate existing regulators and standard-setting bodies.

Natural Climate Solutions

Drawing on research from McKinsey & Company and others, the Taskforce identified between eight and 12 billion metric tons of carbon dioxide credits that could be brought to market annually by 2030, with 65 to 85 percent of them coming from Natural Climate Solutions (NCS) – primarily conservation of endangered forests and peatlands, which accounted for 3.6 billion metric tons per year.

The blueprint, therefore, includes provisions for project-based REDD+ (Reducing Emissions from Deforestation and Degradation, plus the enhancement of carbon stocks), but it emphasizes the need to nest such projects in jurisdictional efforts where possible and improve existing safeguards. It also recommends the creation of a supplier/financer matching platform that would make it easier to assess the creditworthiness of small suppliers.

Reduce, Report, Offset

The blueprint encourages consensus on when a company can utilize offsets to meet a net-zero commitment and encourages an approach similar to that championed by the Science-Based Targets Initiative (SBTi), which the Taskforce summarizes as “Reduce, Report, Offset,” meaning a company should first come clean on its emissions in a verifiable way and create a plan for eliminating them through fuel-switching or other direct measures, then it should submit to audits on its progress, and finally it should use carbon credits to offset those emissions it can’t eliminate internally.

It recommends the creation of a “High Ambition Demand Accelerator for the  Voluntary Carbon Market” (HADA-VCM) that will coordinate with existing efforts such as SBTi, Climate Action 100+,  and the Net-Zero Asset Owner Alliance (NZAOA) to develop principles for utilizing credits and for marketing offsets at point-of-sale, which critics argue leads to “guilt-free” buying of fossil fuels and other products that generate emissions.

“This is complementary [to direct reductions],” Carney said during a panel discussion World Economic Forum. “it’s one piece of the puzzle, but we need this market.”

Reductions vs Removals

Several issues proved contentious during the consultation process, and the issue of reductions vs removals is one of these. It is likely to remain so in Phase 2.

In early drafts of the blueprint, the Taskforce proposed the creation of two grades of credit based on whether they reduced emissions – by, say, funding low-carbon technologies or conserving forests – or removed greenhouse gasses from the atmosphere – by, say, deploying carbon capture technologies or planting trees.

In early drafts, credits that generated removals were seen as a premium grade over those that generated reductions, largely due to market demand from new buyers. Opponents of the proposal, however, argued that it made little sense to emphasize removals over reductions at this stage, when markets should be utilized to accelerate reductions across the board. Many argued that even differentiation is problematic when natural climate solutions are involved because conservation both reduces emissions and enhances sinks.

In the end, a consensus emerged that reductions and removals should be emphasized now, with a gradual shift to emphasizing removals as trees grow and new technologies mature. The blueprint does, however, group credits into two categories – avoidance/reduction credits and removal/sequestration credits – while not making a quality distinction.

What About Old Credits?

Another contentious issue was what to do with older credits, which are often cheaper than newer ones and represent reductions achieved in the past. The Taskforce initially leaned towards eliminating older credits, as the International Civil Aviation Organization (ICAO) had done with its Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA).

Many consultation group participants argued that eliminating older offsets would punish organizations that took early action and that older offsets were a legitimate tool for offsetting historical emissions, as many companies are doing.

In the end, the Taskforce chose not to exclude projects based on vintage or start date but to review methodologies against the Core Carbon Principles (CCPs). The exact procedure for reviewing existing methodologies was left for Phase 2.

The Consultation Process: What Next?

The Taskforce published its first public Consultation Document on November 10, with 17 recommendations spread among six topics, and the IIF encouraged all market participants to submit feedback by December 10.

“Exactly how the infrastructure for the voluntary carbon market as outlined in this blueprint will be operationalized is still to be determined,” the blueprint states. “While there are important decisions yet to be made, we want to make sure that the final governance structure adds value and helps to drive further finance towards climate mitigation.”